August 19, 2005


Treasury blocks move to flat rate inflation (George Jones and George Trefgarne, 19/08/2005, Daily Telegraph)

The Treasury has suppressed arguments in favour of introducing a flat tax - a radically simplified system charging the same rate on all income - documents passed to The Daily Telegraph show.

The system is being backed by free market reformers worldwide but a Treasury paper released under the Freedom of Information Act last month had key sections detailing the advantages blacked out.

As a result, it was interpreted as showing that the Government had dismissed as "misleading" arguments for abolishing all exemptions and charging the same rate of tax on all personal and corporate income.

The uncensored paper seen by The Daily Telegraph presents a more balanced picture, acknowledging that a flat tax could increase economic activity and tax revenue, making Britain more attractive to foreign investors. It could create a "mini-economic boom" and would "eliminate distortions", the paper says.

And who would want that?

Posted by Orrin Judd at August 19, 2005 11:14 AM

As it is, the rich pay less taxes than the poor, so i dont know what this would do. In addition, taxes mean a lot less for those who have tons of disposable income. In addition, we give more tax breaks to transnational corporations than we ever had to the poor. In addition, the increased cost of living (gas, inflation, etc), has allowed for even less spending money more lower and middle class families.
Face, because of outsourcing, and a bad economy, and wasted money, the middle class is disappearing. Soon America will be like a Third-World country with a few very rich and a mass of those who serve them.

Posted by: DB at August 19, 2005 11:50 AM

The poor pay no taxes, they get, not give.

Posted by: erp at August 19, 2005 12:04 PM


So you guys have been telling us...for centuries.

Posted by: oj at August 19, 2005 12:05 PM

Soon America will be like a Third-World country with a few very rich and a mass of those who serve them.

As opposed to the past, when we allowed the rich to own the masses.

But let's take this one step at a time. DB, I deny that the poor pay more taxes than the rich. Justify that statement.

Posted by: David Cohen at August 19, 2005 12:17 PM

I don't think that DB has a very good outlook on life. Why is it, that when someone from the left speaks up, I get the idea that they lead miserable lives? Or is it just me?

Posted by: AllenS at August 19, 2005 12:49 PM

David: Justify it indeed. I'll risk that folks such as DB would even bother to look at or subsequently believe and government-generated figures, but here they are according to the IRS. The top 20% pay 80% of the taxes. Plain and simple. Which also means, the top 50% pay over 96%, the top 10% pay over 64% and the top 5% pay over 53%. See also

Posted by: John Resnick at August 19, 2005 12:53 PM


To a liberal life is a tragedy, to a conservative a comedy.

Posted by: oj at August 19, 2005 12:54 PM

Here's all I know--if taxing the poor is paying for a $2.2 trillion budget, then our poor have too much money.

Posted by: oj at August 19, 2005 12:57 PM

DB has a very warped view of what it means to be "poor." His poor live like kings and may be only considered "poor" in comparison to the emperors. The kicker is that when the incomes of "poor" are credited with the value of benefits in kind, their poverty vanishes.

Several time a week I drive past a "low-income" housing project going to and from my gun club. Cars, many cars, many large and new cars and trucks, are parked on its streets.

Let us move on to the question of flat tax. C Northcote Parkinson's excellent little book, The Law ond the Profits, sets out how Leviathan divides and rules the economy. Once a system is set up in which segments of society are gulled into believing that they are getting a free of cheaop ride at their neighbors' expense, envy and greed are put in service of the political classes.

Not without cause was flat taxation part of the original intent of our constitution.

Let us celebrate and welcome "opposing viewpoints" here. This is how free expression is suppose to work: the presentation of error creates opporunities for clarity of thought through the refutation of error.

Posted by: Lou Gots at August 19, 2005 1:16 PM

John: I assume to the extent that he was doing anything other than spouting propoganda, DB meant to say that taxes (including all the flat and regressive taxes (FICA, real estate, sales, etc.) are a higher proportion of the income of the poor than of the rich. But what does he consider poor?

Posted by: David Cohen at August 19, 2005 1:26 PM

And DB - under most flat tax plans the poor and the lower middle class would pay no income tax at all - Forbes's flat tax plan would exempt any single person making less than $36K a year, and a family of four would be exempt up to $46K. This would substantially increase the number of people who don't have to pay any income tax.

Posted by: Shelton at August 19, 2005 1:32 PM

Back when I wore a younger man's clothes I was poor enough to take the EITC. I think my total earnings were less than 8000 dollars gross for 1996. The Telefile machine actually made me take the EITC and I think I wound up making money in the long run. So, yes, poor people are taxed, but if they take the options that the government practically begs them to take they won't be taxed.

Posted by: Governor Breck at August 19, 2005 1:58 PM

Which is all to say that the flat tax isn't a flat tax. It's a graduated tax with fewer brackets than the current set, and more people in the 0% and lower brackets.

Posted by: joe shropshire at August 19, 2005 2:12 PM

Didn't any one else notice that DB thinks this article is about the USA, not the UK?

Posted by: Annoying Old Guy at August 19, 2005 2:21 PM

AOG: Please. You musn't burden us with inconvenient the facts -- we have mantras to chant here.

Posted by: John Resnick at August 19, 2005 2:29 PM

I was confused by the article as well. Does the UK have a Freedom of Information Act?

I would approve of a flat tax in the US, but the kicker is still how to control spending. If you don't limit government spending to income, then you're just giving government a credit card with no limit.

Posted by: Robert Duquette at August 19, 2005 3:31 PM

History demonstrates there is no meaningful limit.

Posted by: oj at August 19, 2005 3:35 PM