Concept means poor pay higher rate than rich
Rick Perry came to town last week, promoting his newly-announced 20 percent flat tax plan.
It's his answer to Herman Cain's 9-9-9 plan and Newt Gingrich's 15 percent flat tax. Meanwhile, the "We are the 53 percent" campaign started by a conservative blog (referring to the 53 percent of Americans who pay federal income tax) continues to gain traction, or at least to receive media attention.
It is quickly becoming orthodox on the right-wing of American politics that the rich pay enough (or too much) in taxes and that the poor pay too little.
This meme may resonate in certain circles, but those of us who still occupy reality know it simply isn't true. The federal income tax that 47 percent of us don't pay is not the only tax levied on this country's workers. There's also the payroll tax, which is regressive: After the $106,800 cap, it takes a smaller proportion of income as income rises. And then there's state and local taxes.
If you're a worker in South Carolina making $10,000 a year — for example, if you're a student with a part-time job — your state income tax is negligible.
But, according to a 2009 report by the Institute on Taxation and Economic Policy, you probably pay about 5 percent of your income in sales taxes, compared to .8 percent for someone making $390,000 or more. Altogether, the burden of various state and local taxes comes to about 7 percent for the bottom 20 percent, and 5.5 percent for the top one percent. The overall burden is regressive, and this is normal for state taxes across the country.
The progressive federal income tax offsets other regressive taxes, making the overall burden progressive, but barely: The overall tax burden hardly rises at all between the middle class and the ultra-rich. A flat federal income tax would provide no offset at all, and the overall burden would become regressive. The poor would pay at a higher rate than the rich.
Let's assume this is not the outcome Perry really wants — that he just wants everyone to pay the same share and hasn't looked at the actual numbers. On its face, this looks like fairness: let's treat everyone equally. But collecting a percentage of income, and not a flat fee, is itself an acknowledgement that those who have more should pay more. The percentage is not the tax, it is the function we use to calculate the tax.
A flat percentage is simpler. It fits, like Perry said last week at the Statehouse, on a postcard. In fact, it fits on a stamp.
Mathematically, we could model it as a line, rising at a constant rate as income increases. A progressive tax, on the other hand, curves sharply upward, rising faster as income increases. But in math, a line is just one kind of curve — a curve described by a very simple equation, but still a curve.
I am not familiar with any moral principle that derives fairness from mathematical simplicity.
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