Jeffrey Yasskin’s blog

I’ve been thinking about taxes recently and reading Andrew Sullivan’s opinions on them, and I’m mostly convinced that a flat tax with a significant standard deduction/personal exemption is at least a reasonable idea. I haven’t yet convinced myself to support it, but I can’t think of any arguments against it. The Rockridge Institute has a good argument that rich people should be expected to pay more in taxes than poor people: they get more in return from the government. But that doesn’t easily extend to an argument that they should pay a higher percentage of their income. If you have a good argument against a flat tax, please comment.

If we assume that no tax should interfere with your ability to feed and house your family and that taxes should treat everyone equally otherwise, then we get the following system. First, add up all of your income. That includes both money you worked for and interest and capital gains. Subtract the poverty line for your household. Multiply that by the tax rate, which is the same for everyone. Pay that amount to the government. Oh, and payroll taxes are evil and should be rolled into the standard income tax.

tax        = net_income * tax_rate
net_income = income - poverty_line(your_household)
income     = earned_income + capital_gains
             + interest + forgotten_stuff?

Variations are possible on this theme. We’d probably want to keep some deductions, like for green vehicles, mortgage payments, and charitable donations. These can be subtracted from the net_income. Given deductions, we might want an alternative minimum tax, which could be simply (income - poverty_line) * lower_tax_rate, and then your tax is the larger of the two. Finally, we might want some tax credits. I suspect that these are a bad idea, and that the government should directly subsidize anything it is tempted to give a tax credit for, but they easily fit in as a decrease in the total tax.

Howard Dean has clearly been reading George Lakoff. He gave a speech at George Washington University which lays out his vision for the future of the Democratic Party. He’s clearly tired of people trying to push the party right. Instead, he wants the Democratic Party to start framing the debate. It’s worth reading.

Leftist rag proclaims end of American Dream through drop in social mobility! Read it all at http://www.businessweek.com/@@SV5bKocQnzhS3BUA/magazine/content/03_48/b3860067_mz021.htm.

(You may have to register. If you don’t want to, it’s reprinted at http://reclaimdemocracy.org/weekly_2003/american_dream_death.html)

Edit December 5, 2004

More evidence that the dream is dying can be found at the Rockridge Institute: By 2003, the income and benefits sufficient to reach the [American] Dream for an average family of four in the U.S. reached $46,500, … [but] half of all men who worked full-time and full year earned less than $40,668.