The nation nears the fiscal precipice as I write these words, and as you read them it may well have gone over. In Washington, Waikiki, and wherever, it’s all politics as usual: the White House talks only to Democrats while demanding that Republicans capitulate; House Republicans have refused to go along with a John Boehner surrender; and the canny Mitch McConnell and the uncanny Harry Reid have failed to compromise and adopt a budget for nearly four years.
In contemplating the situation I am reminded of something from my childhood, when my mother got me interested in reading the newspaper advice columns: “Dear Abby,” “Ask Ann Landers” (Abby’s real-life sister), and “Hints from Heloise.”
Likely from some combination of these three I became aware of two apparently pressing American household problems: how to get the dog to stop drinking from the toilet, and how to get men to lower the ring above the toilet bowl after using it to urinate (in order to keep the ladies of the house from falling in when they got up to use it in the middle of the night).
Even as a child, the answers to these problems seemed obvious to me, and the answer to both problems was the same: just close the damned lid! The dog would not find an open, inviting bowl of water, and the humans in the house could raise and loser as much of the device as their form and function required, returning things their lowest energy state after use.
The reason this is relevant to the so-called fiscal cliff discussion is that both sides claim to want something different yet the obvious solution for both sides is the same.
Democrats want higher taxes on “the wealthy” (confusing wealth with income) in order to make them pay their “fair share” (ignoring that the top 1% of income earners already pay nearly 40% of all individual U. S. income taxes). Republicans want spending cuts from a bloated federal tax-and-spend program (you can’t really call it a “budget” when the Senate fails to adopt one) while preserving slightly lower top marginal income tax rates of the past ten years for everybody.
Democrats counter that “the rich” don’t deserve a tax “cut” and don’t really pay even current marginal top rates because dividends and interest are taxed at lower rates than ordinary income. The only thing on which parties currently both seem to agree is that the U.S. corporate tax rate of 35% — according to the December 27, 2012, Chicago Tribune, the industrialized world’s highest — is too high.
The result, of course, is government gridlock that punishes the people by preventing businesses and families from being able to plan, thus ensuring at best less than optimum growth and at worst another tax-induced recession. Surely, America, we can do better than this? The answer is, to coin a phrase, yes, we can!
Here’s a simple solution to a seemingly complex problem: adopt one single income tax rate and apply it to all “incomes, from whatever source derived,” to quote the language of the Sixteenth Amendment, which made an income tax unquestionably Constitutional. Make everybody, that is – employees, employers, the self-employed, corporations, “undocumented immigrants,” and of course all those nasty rich people like most of Hollywood, Warren Buffett, and Barack Obama – pay the same percentage of income as their tax.
The result should please both conservatives and progressives, for the system would be both conservative and progressive. Someone who earns ten times as much as another would pay ten times as much in income tax – guaranteed, no exceptions – ensuring that the system is “progressive” because the more you earn, the more you pay.
Warren Buffett and Mitt Romney would no longer get the benefit of a lower average tax rate than their secretaries (if that’s even actually true; they surely pay vastly more in taxes). Those who get their income by clipping bond coupons would pay the same percentage as those who buy their groceries using clipped newspaper coupons. And those nasty, evil corporations that don’t do anything except employ people and make products and provide services that make people’s lives easier would pay the same rate as natural people, just like you and me and Warren Buffett. What could be simpler or fairer?
Conservatives should also be happy, because everyone would now have skin in the game. No longer could half the people vote to take money out of the other half’s pockets and put it in their own without having to pay part of the price themselves. Governor Romney’s infamous 47% would no longer just be riding in the wagon; they’d also take their turns pulling it. And maybe the next time the government voted to raise taxes for a war, a new cabinet department, a farm subsidy, or a grant to study the mating habits of the naked mole rat, Congress would think more carefully before voting to spend the funds.
Economists would grouse, of course, that economic inefficiencies would arise from taxing capital and labor at the same rate, and that corporate income and savings are already being taxed twice. In both cases they would be right. But those inefficiencies would likely pale in comparison to the current estimated $400 billion drag on the economy – nearly 21% of all revenues collected – that tax compliance and avoidance schemes currently cost the country.
But the biggest gains would be moral and spiritual, however, giving hope for preserving the American experiment in representative government beyond the next few years. As President Lincoln observed in 1858, a house divided against itself cannot stand (in this case half taxed and half not). Like Lincoln, I “do not expect the Union to be dissolved — I do not expect the house to fall — but I do expect it will cease to be divided” and in time“[i]t will become all one thing or all the other.”
Either the have-nots will continue to outvote the haves until America collapses on the ash-heap of failed social welfare states throughout history, or the United States will return to a nation conceived in liberty and dedicated to the proposition that all of us are created equal. Because there are no rights without correlative responsibilities, we all share obligations to our nation and to one another.
It is not too late to save the American experiment, but time is growing short. Another election cycle – perhaps two, maybe as many as three or four – on our current course and government of the people, by the people, and for the people will have perished from these shores.
Let it not be on our watch.