Ari Fleischer‘s WSJ column “It’s Bad for Our Democracy to Exempt Half the Country From Income Taxes” is attracting widespread commentary, mostly along predictable party lines.
While I agree with the basic premises (see, for example, “Class Warfare: Framing the Debate“) I am rather dubious of his actual programmatic prescription:
I favor the abolition of all Social Security, Medicare and estate taxes. In their place, we should create a simple income tax system that has no deductions or credits at all. The result would be a progressive, multitiered income tax in which everyone pays.
Abolishing the separate Social Security and Medicare taxes probably makes sense. He’s right: the idea that these are set-asides rather than simply paid out of general revenues is a fiction.
But, surely, we don’t actually want to have everyone pay taxes based on gross income with “no deductions or credits at all“?
That would be devastating, indeed, for those of us who declare income as sole proprietors of businesses. While there’s room for quibbling on implementation, it’s almost unfathomable to tax “income” that is paid out for legitimate business expenses. For many, this would quite literally leave them owing more in tax than they earned.
