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Flat tax game changer?

October 17, 2008

In one of my Joe the Plumber posts yesterday, I included an observation from Citizens for Tax Justice that John McCain might be edging toward support of a flat tax.

The nonprofit public interest group cited McCain's comment during his final debate with Barack Obama about the Democrat's use of the phrase "spread the wealth."

Spreading the wealth, says CJT, is the purpose of a progressive income tax with graduated rates. So by denouncing that concept, asks the group, is McCain indicating his support for a flat income tax or a national sales tax instead?

That move might be on the approaching election horizon, says Huffington Post blogger Chris Kelly.

Running behind in most polls and with time running out, Kelly writes:

I think John McCain has one more trick up his sleeve. (One last hand from the grave? Some metaphor about shock and clutching.) I think John McCain is planning our terror. I think John McCain is going to pitch the Flat Tax.

Fair to whom? The flat tax has been the holy grail of anti-tax groups for ages. Wouldn't the world be wonderful if we just got rid of all these convoluted loopholes that only rich folks with smart tax advisers can use and we all just paid the same rate?

Yeah, for the rich people.

They're much more equipped to deal with any percentage that might be set for a flat tax.

If it takes 80 percent of your income to cover your living expenses, then lopping another 15 percent off that for taxes is going to push you to the literal subsistence edge.

If, however, you're well enough off to only need 5 percent or so of your income to live comfortably, then that 15 percent tax rate is negligible.

Mccain mug_close-up
So I agree with Kelly, who says, "The Flat Tax, stupid in the best of times, would be really, really, really stupid now."

But I fear that Kelly could be correct in predicting that McCain might well become the flat tax's biggest fan in the next couple of weeks.

Even if there's no realistic chance it would be enacted, it would be, writes Kelly, "a great election promise, though, don't you think? A game changer? Really shake things up? Wouldn't it be a maverick thing to do?"

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
  • Well, your dislike of McCain explains why you failed to mention any of ACORN’S massive half a million dollar tax liens while you were participating in the hatchet job aganist average Joe.

  • Is a flat tax fair? The graduated system means that those with more resources pay more tax.

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