The Kochs’ Americans for Prosperity has a funny definition of fairness. As in they find it patently unfair that billionaires should be burdened a higher income tax rate than working families.
In their tax reform document, AFP bemoans that one reason people support a progressive income tax in part “based on a theory of fairness–which can include the desire to make the wealthy pay more due to the nebulous concept of their ‘ability to pay’ more.” In AFP’s fantasy land, apparently the only impediment to a minimum wage worker buying groceries for the week is the “nebulous concept of her ability to pay” for them.
AFP goes on to lament that a progressive tax code “removes individuals in lower brackets from the reality of the cost” of anti-poverty programs. Naturally, they conclude that a flat tax system, which would drastically cut taxes for the wealthy and shift more of the tax burden onto working families, is the only way to escape “the moral problems and economic inefficiencies” of the current system.
In short, the Kochs and AFP’s definition of economic inequality is that billionaires pay higher taxes than people living paycheck-to-paycheck.
Background
AFP’S SUPPORT FOR FLAT TAX
Americans For Prosperity: “Taxes Should Be Flat With Uniform Rates Across All Taxpayers.” According to Americans for Prosperity, “Taxes should be flat with uniform rates across all taxpayers. Taxes should not target individuals based on their ability to pay.” [Americans for Prosperity, 2013]
- Americans For Prosperity: “Our Motivations Are To Create A Simple, Flat And Neutral Tax Code With The Fewest Distortive, Secondary Effects On The Economy.” According to Americans for Prosperity, “In this paper AFP recommends the elimination of numerous tax provisions and counsels for the expansion of others. Our motivations are to create a simple, flat and neutral tax code with the fewest distortive, secondary effects on the economy.” [Americans for Prosperity, 2013]
- Americans For Prosperity: “A Flat And Low Tax System Escapes The Moral Problems And Economic Inefficiencies That Plague The Progressive Tax System.” According to Americans for Prosperity, “A flat and low tax system escapes the moral problems and economic inefficiencies that plague the progressive tax system. Because all individuals pay the same rate, there’s less of an incentive to game individual tax brackets because everyone is under the same tax bracket.” [Americans for Prosperity, 2013]
- Americans For Prosperity Praised Budgets Introduced By Paul Ryan And Rand Paul For Moving “The United States Away From Its Deeply Progressive And Complex Tax System In Order To Replace It With A Flatter Tax System.” According to Americans for Prosperity, “In light of these issues, AFP urges Congress to both lower and flatten personal income tax rates. There are currently proposals in Congress to do just this. House Budget Committee Chairman Paul Ryan’s budget would establish a two-rate system at 10% and 25% (with the final income brackets to be determined by Ways and Means). In a similar fashion, the Republican Study Committee’s budget also establishes a 15% and 25% rate. Finally, Sen. Rand Paul’s budget makes the boldest move of any of the proposed budgets by eliminating all current tax brackets and replacing them with one flat rate at 17%.117 All of these proposals would move the United States away from its deeply progressive and complex tax system in order to replace it with a flatter tax system.” [Americans for Prosperity, 2013]
Americans For Prosperity: “It Is Vitally Important To Understand The Elimination Of Energy Subsidies As An Important Part Of Broader Efforts To Clean Up And “Flatten” The Tax Code.” According to the letter, “It is vitally important to understand the elimination of energy subsidies as an important part of broader efforts to clean up and “flatten” the tax code. Policymakers from all political stripes agree that the nation’s tax code is far too complex, forcing businesses to waste many hours and resources wading through the mire of special tax exemptions, benefits, and credits that distort the economy. Americans for Prosperity strongly supports making the tax code leaner and more efficient, eliminating inefficient targeted tax expenditures and lowering the overall individual and corporate rates.” [Americans for Prosperity, 6/3/11]
EFFECTS OF FLAT TAX PROPOSALS ON MIDDLE CLASS
Robert Reich Op-Ed: “The Flat Tax Is A Fraud. It Raises Taxes On The Poor And Lowers Them On The Rich.” In an op-ed, Robert Reich wrote, “Next week Rick Perry is set to announce his own version of a flat tax. Former House majority leader Dick Armey — now chairman of Freedom Works, a major backer of the Tea Party funded by the Koch Brothers and other portly felines (I didn’t say ‘fat cats’) — predicts this will give Perry ‘a big boost.’ Steve Forbes, one of America’s richest billionaires, who’s on the board of the Freedom Works foundation, is delighted. He’s been pushing the flat tax for years. The flat tax is a fraud. It raises taxes on the poor and lowers them on the rich.” [Robert Reich Op-Ed – Huffington Post, 10/22/11]
Former Congressional Budget Office Director Robert Reinschauer: “Under Any Flat Tax That Raises An Equivalent Amount Of Money, It Is Unavoidable That Middle And Lower Income People Will Pay More Than They Do Under The Existing Tax Code.” In an op-ed, Scott Lehigh wrote, “Further, ‘under any flat tax that raises an equivalent amount of money, it is unavoidable that middle and lower income people will pay more than they do under the existing tax code,’ notes Robert Reischauer, former director of the Congressional Budget Office.” [Scott Lehigh Op-Ed – Boston Globe, 10/28/11]
Codirector of Center for Economic and Policy Research Dean Baker: “A Flat Tax Means The Rich Pay Less. And If The Rich Pay Less And We Raise The Same Amount Of Money, Then Someone Else Has To Pay More. And The Someone In This Story Is The Middle Class.” According to Baker: “The other part of the story is that the flat tax means a large tax cut for rich people. Every economist who has examined flat tax proposals over the years comes to that same conclusion: A flat tax means the rich pay less. And if the rich pay less and we raise the same amount of money, then someone else has to pay more. And the someone in this story is the middle class. It really is that simple.” [US News and World Report, Debate Club,11/1/11]
Ramesh Ponnuru Op-Ed: Rand Paul’s Flat Tax Plan Would Result In “A Bigger Bill For A Lot Of Middle-Class Households.” In an op-ed, Ramesh Ponnuru wrote, “Paul’s economic plan includes a 17 percent flat tax to replace the current income tax. The effect of such a policy would be a bigger bill for a lot of middle-class households.” [Ramesh Ponuuru Op-Ed – Bloomberg, 6/21/13]
Ramesh Ponuuru Op-Ed: Under Rand Paul’s Plan, “The Very Richest Americans […] Would See Their Taxes Decrease A Lot.” In an op-ed, Ramesh Ponnuru wrote, “The very richest Americans, on the other hand, would see their taxes decrease a lot. The journalists buzzing about Paul have rarely discussed this.” [Ramesh Ponuuru Op-Ed – Bloomberg, 6/21/13]
A Single Mother Making $35,000 Would Pay $600 More In Taxes Under Rand Paul’s Plan. In an op-ed, Ramesh Ponnuru wrote, “A single mother of one making $35,000 a year would see her tax liability rise, too. If she uses the standard deduction, she pays about $1,500 today. She’d probably pay $2,100 if Paul had his way.” [Ramesh Ponuuru Op-Ed – Bloomberg, 6/21/13]
A Family Making $65,000 Would Pay $800 More In Taxes Under Rand Paul’s Plan. In an op-ed, Ramesh Ponnuru wrote, “The median income for a family of four is $65,000, and under the current tax code — assuming the family takes the standard deduction — its federal income-tax bill would be about $2,700. Under the plan Paul sketches, it would be about $3,500.” [Ramesh Ponuuru Op-Ed – Bloomberg, 6/21/13]
Center On Budget And Policy Priorities: A Flat Tax Increased Inequality In Illinois. According to the Center on Budget and Policy Priorities, “When Illinois enacted the single-rate rule in 1970, the income gap between the wealthy and everyone else nationwide had been falling for several decades. Since the 1970s, however, the top 5 percent of Illinoisans’ incomes have risen 123 percent — six-and-a-half times the rate for middle-income households (see chart). In other words, most of the income benefits of the state’s economic growth since 1970 have accrued to the wealthy, and Illinois today has the nation’s ninth-highest level of income inequality.” [Center on Budget and Policy Priorities, 4/23/14]