Kentucky Sen. Rand Paul has joined the list of Republican presidential candidates calling for a flat tax. Many mainstream economist pooh-pooh the idea, but Joseph Thorndike, director of Tax Analysts’ Tax History Project, thinks it has a chance.
Paul's plan calls for a 14.5 percent income tax on individuals and businesses.
To be sure, "if recent experience is any guide, it won’t be an easy sell," Thorndike writes on Forbes.com
. "Just ask Steve Forbes, Newt Gingrich, Rick Perry, or any of the other failed candidates who put flat taxes at the center of their campaigns."
But that doesn't mean Paul's plan is doomed, Thorndike says. "A long view of history suggests that flat taxes may have some legs."
While the graduated tax-rate system has been in effect since 1913, flat taxes were implemented before then — in 1861 and 1894 — though these taxes were dropped before they were collected.
And some recent polls show public support for the idea.
Paul’s plan "is certainly radical," Thorndike writes. "But radical doesn’t mean implausible.... History suggests it might have a shot."
MarketWatch columnist Caroline Baum supports a flat tax
too, but she doesn't share Thorndike's optimism that it can be passed.
"The flat tax has an intuitive appeal — and not just for Republicans, for whom cutting taxes is orthodoxy," she writes.
"Democrats should appreciate the idea of a flat tax as a way to level the playing field: The wealthy benefit the most from the tax code’s myriad of loopholes .... The only entities with a reason to oppose a flat tax would be large corporations and their huge staffs of accountants."
But if a flat tax was really politically possible, it would have been approved by now, Baum says.
"Moneyed interests are just too strong to sacrifice their exemptions, even though in many cases they would pay a lower effective rate under a flat-tax system."
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