After watching the Democratic Presidential debate the other night, my wife brought up the topic of the flat tax "Who could possibly be against it (or the national sales tax, for that matter). What's not fair about it?" I believe she asked. Ostensibly, liberals/Democrats will always tell you it's not progressive. On the face of it, they're right. The sales tax is even regressive, regardless of the fact that, the less you spend (and subsequently, the more you save), the less no tax you pay. It's all about appearance.
Another smaller argument they could use, if they had to resort to it, is all the jobs that would be lost if the code was so simplified, both public and private. They might be more concerned with public since they're more likely unionized. Welcome to the dynamic economy that is that of the United States. Sure, there might be a little uptick in unemployment, but in the long run (something fewer and fewer Americans think about), the tax industry lawyers, accountants, etc. would find more productive work, work that actually adds value to the economy. Their work currently just contributes to deadweight loss.
Despite the evidence to the contrary since the 2003 Bush tax cut and the late 90s Clinton tax cuts, both of which cut that of the capital gains, they use static analysis and insist that revenues are unequivocally lost when taxes are cut ("It was Clinton's 1993 budget plan i.e. tax hike that produced the late 90s surpluses", they'll say). That's why they think revenues will most definitely go up when taxes are raised; $1 revenue increase for $1 tax hike.
Unless they are willing to admit that tax cuts (the right kind, on marginal rates and particularly that on capital) actually increase revenue some by making work, savings and investing more attractive, you have to reach the conclusion that they just don't want the more productive citizens keep more of their pay. I once heard a saying "Holding back the strong is no way to help the weak"? One could be allowed to think, given just how little more government really helps the poor all that much, that it's class envy.
That's one thing that has irked me about Bush. He possibly could have had surpluses by now. Not that surpluses are a good thing since, theoretically, it means Uncle Sam has overcharged us. But they are good thing politically, since they are, by definition, not deficits. But he had to go on a spending spree while in office, spending money on education (which, according to the Constitution, is a state issue), adding a new, fat entitlement, continuing farm subsidies, signing pork-laden spending bills, etc. The GOP might not have lost Congress had they not gone along with him and allowed the surpluses to come back.
That would have lent a substantive Keynesian quality to the 2001 tax cut where, up to that point, such a characteristic was fulfilled only by the non-productive, but feel-good $600 check we received back in 2001. A Keynesian quality, I might add, that was helped a great deal by what really works; supply-side policy.
