On December 10, 1981, my distinguished colleague Robert
(Bob) E. Hall and I first proposed our flat-tax plan in the editorial pages of
the Wall Street Journal. We followed it
with a book in 1983, which we updated in 1985, 1995, and 2007 (the latest
edition is free to download and print from the
Hoover Press).
Imitators followed in short order. With very slight adjustments to the tax rate
and personal allowance, Dick Armey and Steve Forbes proposed identical plans. (As politicians, they attached their own
names to the plans. A politician cannot
run for office using the names of two academics as the authors of their plans).
Art Laffer wrote a different kind of flat tax for Jerry
Brown in 1992 and asked me to serve as Brown’s spokesman for the plan, which I
did for six weeks. Laffer has written
similar plans for Rand Paul and Ted Cruz, differentiated by rates on gross
business income minus investment (effectively a VAT) and personal income.
Ben Carson has an across-the-board 15 percent and Rick
Santorum 20 percent flat taxes.
Jeb
Bush, aided by some of his brother’s former advisers, has proposed a
modification of George W’s tax legislation.
The others are talking in terms of lower rates and fewer
deductions.
Carly Fiorina wants a
three-page income tax; Hall-Rabushka's draft law is three-and-a-half pages long.
Marco Rubio is an outlier, with a top rate of
35 percent in his plan co-authored with Senator Mike Lee.
(The
Tax Foundation has an excellent table,
which updates and compares all the candidates tax proposals, both Democrat and
Republican.)
One or another version of a flat tax has been adopted in over
40 jurisdictions worldwide, most following the collapse of the Soviet Union.
Others are under consideration in the Isle of
Man beginning April 1, 2016, and in Italy, Ireland, and Poland in preparation
for their next national elections.
(Our
book has been translated into
Italian and Polish).
Will the United States have a flat tax anytime in the near
future? It depends first on who becomes
the Republican nominee, and if he (she) wins.
Second, Republicans must retain majorities in both branches of Congress. Third, the Senate must be prepared to use the
nuclear option, if necessary, to defeat a filibuster.
No one would have predicted in 1981 that over forty
countries would have a flat tax in 2015, or that Western Europe would have
several countries considering a flat tax.
Good ideas with strong marketing can overcome inertia, special
interests, and establishment politicians with their Praetorian Guards of academic
advisers, and such international organizations favoring steeply graduated
income taxes (in the guise of fairness) as the IMF, OECD, World Bank, and
numerous left-leaning think tanks.
Your friendly proprietor has racked up hundreds of thousands
of miles traveling the globe to explain the flat tax and support flat-tax
movements. I frequently receive requests
from foreign countries in Africa, Asia, Central and South America, the
Caribbean, and the Middle East to explain the details and benefits of the Hall-Rabushka
flat tax. I have written flat-tax plans
for several countries to show how they can replace their harmful, complicated,
multi-bracket tax codes to improve compliance and growth.
On personal note, it is gratifying to see thirty-five years
of work bearing fruit.
