Basic Income and Tax Reform
Everyone’s talking about taxes, it seems, and not just about tax cuts as part of the economic stimulus package. Here’s a Washington Post editorial about Tom Daschle’s errors and failure to pay. This New York Times editorial calls upon Daschle to withdraw his nomination.
Daschle’s mistakes, like Tim Geithner’s, are a good argument for tax reform. If they can’t understand and follow the rules, when both helped make the rules and enforce the rules, and both earn lots of money and can afford to hire accountants and tax attorneys, it makes no sense to expect us ordinary Americans to do any better.
The Obama administration ought to be calling for radical tax reform and simplification. But they and other elected officials are doing just the opposite. They’re not telling us that, of course, but history is clear. Whenever politicians propose new tax credits, deductions, or similar “reforms,” the overall impact is to make the tax code more complex. The proposed economic stimulus package is sure to add lots of complications.
That’s another reason to support for basic income. When everyone has a basic income for food and shelter, it will be a lot easier to reform and simplify the tax code.
First, there will be less perceived need for tax credits and deductions that serve only some people. Everyone will have an income for food and shelter, extra income in addition to what they earn. It will therefore be a lot harder for special interests to rationalize the tax credits.
Second, everyone will have greater means and incentives to work together as We the People to demand reform. We the People, when we organize and work as such, representing our common interests, are much more powerful than any special interests. Thus, advocates for tax reform and simplification will be much more likely to succeed if they make basic income part of their proposal.
Here’s one possibility: We can combine basic income with a flat income tax. If the basic income amount is tax free, say $12,000 a year, for every adult citizen, that could replace the deductions and tax credits. There could be a flat tax, say 20 or 30 percent, on all earnings. No exceptions, no deductions, no tax credits. The net effect would be perfectly fair, with no marginal variations or inequities. Fair. Simple. Just. Easy.
This may be the only way to achieve those goals, which proponents of tax reform sometimes claim are incompatible.
How do we get the Post, Times, and other media outlets to report on basic income? How do we get tax reform advocates to appreciate the power of basic income, they way it can make their proposals more sensible and effective and politically palatable, and to make it part of their proposals?
The first step, of course, is to circulate this post and help spread the word. Thanks.
Steven Shafarman
Tags: flat income tax, New York Times, tax reform, Washington Post