Chris Edwards, of the Cato Institute, has an article in today's Washington Post (here). He rightly criticizes the "sophisticated taxpayers [who] often find loopholes that enable them to reduce or eliminate their tax liabilities."
But his solution, the flat tax, has been around for a long time. It is no closer to being enacting than it was a generation ago. The Hedge Tax adds two important ideas to the flat tax that should attract broader support:
- The flat tax applies just to income tax. But the Hedge single rate tax also replaces Social Security and Medicare taxes. So, low income workers under the Hedge Tax truly won't pay taxes, unlike today, where they pay 15.3% (employer and employee share) on practically the first dollar they earn. Liberal voters will appreciate this.
- The Hedge tax introduces a small asset tax for the very top asset holders. So, high income earners who might still avoid triggering taxable income will still be subject to an asset-based tax burden, thus ensuring that they pay taxes like the rest of us. Liberal voters will appreciate this.
The flat tax is a good idea. The Hedge Tax proposal makes passing it possible.
Comments