Harold Ford Proposes Flat Tax

Henri, I think you’ll want to read this.

I thought the flat tax went the way of the flat earth, but here it is almost 2008 and it’s being proposed again. On top of that, I always thought the flat tax was the intellectual property of nutjobs like Friedman, Hayak, and von Mises. Harold Ford, Jr., you may remember, is the Democrat Congressman from Tennessee who lost the election for the Senate seat vacated by the retiring Bill Frist. Here are a few excerpts from his article for the The Washington Times:

We ended the last century with America’s economic might at its zenith, with Americans at their most optimistic, and with nearly all who endeavored to make the most of their opportunities and talents getting ahead in life. John F. Kennedy’s declaration that a rising tide will lift all boats was alive and well.

To address the challenges of the middle class, Democrats should advance an agenda that aims to do something loftier than just repeal the Bush tax cuts on millionaires. It should boost incentives for average Americans to increase savings and investments, and help them participate more fully in the upside of economic growth.

Toward that end, here are a few ideas that will help more people share in the rewards of the modern economy:

• Middle-class flat tax: This is simple and fair: no middle-class family with an income of under $150,000 should ever pay an effective tax rate of more than 10 percent. If what they owe after calculating their taxes is more than 10 percent of their income, they won’t have to pay a dime above 10 percent. If they owe less than 10 percent, they pay the lesser amount.

• Permanent capital-gains tax cuts: Long-term capital gains tax rates now are between 5 percent and 15 percent. The rates are progressive: People in or below the 15 percent personal income tax bracket (which applies to married couples making $60,000) get the lower capital-gains rate. We should lower the capital-gains tax even further for people making up to $100,000 a year, provided they hold the asset for up to five years. Thus your tax would be 4 percent if you hold the asset for three years, 3 percent if you hold it for five years. This sliding scale for taxing capital gains will encourage investment and increase savings for a majority of Americans.

Sounds good to me. And yes, I did just go from blogging about Philip Roth to flacking tax policy..

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