November 21st, 2006

Brad @ Burning Man

Can We Dispose of this "Flat Tax" Silliness Once and for All, Yet?

Every four years for the last 20, a study group funded by grants from most of the local municipalities has been putting out a report called "Where We Stand Now," and the latest, "Where We Stand Now 2006," is now available from the East-West Gateway Coordinating Council web page. If you're from the St. Louis area, you definitely want to read this; it's a hefty meal of real red-blooded no-BS facts about St. Louis that we all ought to know. But even if you're not from St. Louis but you are from any of the other 34 largest cities in the US, the cities with a total overall metropolitan area population of roughly one million or more, you might want to grab a copy anyway. You can skip the roughly 2/3 of the pages that are summaries of St. Louis's place in the overall comparisons and skip right to the very juicy, very handy, very compelling lists of what order those 35 cities rank in on dozens, maybe a hundred or so, factors. I may natter on about some of these facts later. But one non ranking related pair of numbers jumped out at me. It's a pair of numbers I hadn't bothered to track down, and it proves a point that I've been trying to make for a couple of years now.

On page 77, there are tables showing how much gets spent by the federal government, and by local governments, per capita in each city. That includes all federal spending, everything from paying Social Security to renting office space to buying paper clips to defense contracts to military base related expenditures. And while it's interesting to observe which cities are obviously being subsidized at the expense of the rest of us (*cough* Miami *cough*), there's an interesting conclusion to be drawn just from the two "average" lines on those tables. Average per-capita federal expenditure, for all citizens in the US, is $9,397. Average per-capital local government expenditure, for all citizens in the US, is $4,043. So to provide the level of government service that we're getting now costs each and every man, woman, and child in America $13,440. Or, if you will, roughly $54,000 per year per family of four.

The poverty line, which 9% of all of our families of four are living at or below, is about $12,500 per year.

Now, the logic of the "flat tax" is simple: since everybody receives equal value from the government, it's only fair that everybody pay the same amount. Now, never mind how blatantly stupid the first half of that is. If you think that everybody gets equal benefit out of government, I suggest you compare the 911 response times in their neighborhoods to the ones in wealthy neighborhoods, compare the amount of police protection they get to the amount in wealthy neighborhoods, compare the quality of their schools to the schools in wealthy neighborhoods, and so on. It's just not even vaguely true. But even if it were true, even if we hold that up as a utopian ideal, where would that leave us?

Even if you taxed that hypothetical family of four that is right at the poverty line 100% of their income, left them not so much as a crumb to feed their kids and not so much as a nickel for the landlord and not so much as a rag to wrap themselves in, you'd be falling about 75% below what it costs to provide basic government services. Even if you're Republican (or right-wing Democrat) enough to think that you can find "significant" amounts of waste, fraud, and abuse in government spending to cut, I guarantee you you can't find 75%. If nothing else, interest on the national debt sucks down roughly a third of all the taxes paid in America, which works out to be just about the whole amount that would be raised by a flat tax set at 100% of what the poorest 9% of us make in a year. Even literally starving the poor to death in the cold and dark to make the flat tax as high as possible, you'd still have to shut down every actual function of government. No road repair, no cops, no military, no Social Security, not a single teacher on the payroll, no fire protection; no nothing but interest payments on the national debt.

Not happening. Obviously.

Can't identify with those 9%? Try this number on for size, from page 27. The median income for a family of four, nationwide, is a smidgen under $51,000. So if we charged half of all familes in the US 100% of their total income in a "flat tax," we'd only have to trim all government spending by about 5%. Never mind that nobody has ever managed this, neither Republicans nor Democrats, you might think that a 5% cut is somehow achievable in some utopian fantasy world. If so, congratulations: in your fictional utopia, you've only taken every ounce of food out of the mouths of half the children in America, and thrown them and their half of all families in America out into the street naked to die in the cold.

Which means that there is only one meaningful way to raise enough money to pay for even the barest minimum of government services, and that is to figure out who can afford to pay more, and charge them extra. And that's called a progressive tax, which in this country takes the form of a progressive income tax on every dollar earned and in Canada takes the form of a value-added tax on every dollar spent (more or less the same amount, for most people) and in most of the world, some hybrid combination of the two. So I really honestly am not interested in hearing even one more word of argument about how wonderfully fair a flat tax would be. It's a basic mathematical impossibility. So can we put this stupid idea away once and for all, yet?