Dr. Ben Carson enters the Republican presidential field without any significant legislative experience so he doesn’t have a record on tax policy. But in a 2013 op-ed, the well-respected neurosurgeon explained his avid support for a flat tax system. The case Carson made then and more recently in an interview on Fox News for the flat tax is based on a number of falsehoods about our current tax system and how a flat tax would work in practice.
Below are some truths about the flat tax that Carson should consider:
1. Flat tax proposals typically do not tax capital income, even though they should.
Carson argued that a flat tax would ensure that the wealthy are paying at least the same amount in taxes as everyone else, compared to our current system where Warren Buffett pays a lower rate than his secretary. Most flat tax proposals, however, exempt capital gains and dividends from taxes, meaning that under such plans someone like Buffett would typically pay no taxes on the bulk of his income rather than the current, maximum rate of 23.8 percent A truly proportional tax system would specify that capital income be taxed the same as normal income.
2. A flat tax would increase taxes on low- and middle-income families.
Carson has bought into the widely disproven notion that low-income people don’t pay taxes, and his op-ed argued that a flat tax would guarantee that low-income individuals pay something in taxes. While the federal tax code means poor and very low-income people pay little or nothing in federal income taxes, the truth is that all working people pay federal payroll taxes, not to mention a plethora of state and local taxes.
A Citizens for Tax Justice study of one flat tax proposal found that the bottom 95 percent of taxpayers would see their taxes go up by an average of $2,887, while the top 1 percent of taxpayers would receive a tax break of $209,562.
3. Deductions and credits make the tax code complicated, not the progressive rate structure.
One of the typical arguments for the flat tax is that it would simplify the tax code. Carson wholly buys into this, claiming a flat or proportionate tax would substantially simplify the tax system. Our current, federal progressive rate structure, however, is not the reason for our tax code’s complexity. It is the myriad tax deductions, credits and loopholes that Congress continually creates. We could simplify the tax system by reforming tax expenditures, as Carson argued, but this would not benefit from or require eliminating the progressive rate structure.
4. A flat tax would still require a revenue collections agency.
In his op-ed, Carson trots out the same irresponsible talking point as Sens. Ted Cruz and Rand Paul, arguing that a flat tax system would allow for the abolition of the Internal Revenue Service (IRS). The truth is that even under a radically simplified tax code, there is no way for a modern state to collect revenue without some agency like the IRS. While calling for the abolition of the IRS may be a good line in a presidential stump speech, it serves to demonize an agency that is woefully underfunded and simply carrying out the role that Congress created for it.