Giuliani Reconsiders Flat Tax

As I noted recently, flip flopping has become a major problem for the three major GOP candidates. Rudy Giuliani has come under attack for yet another flip flop. In 1996 Giiuliani said that the flat tax “would be a terrible mistake for urban areas.” Now that he has the support of Steve Forbes he is considering it.

In recent years Republicans have portrayed flip flopping as the greatest evil, and then distorted statements from Democrats to create false impressions of a change in views. In John Kerry’s case, most of the charges of flip flopping were total fabrications of the right wing noise machine. His views on issues such as the Iraq war were totally consistent if you look at his actual views as opposed to the distortions presented by the right wing media. Of course there were a couple of areas in which Kerry did change his mind. As terrorism became a greater concern, he changed his views on the death penalty to allow for the execution of terrorists. After NAFTA was in effect he supported analyzing the effects and possibly revising the policy. These seemed quite reasonable changes in opinion.

In the case of the Republican flip flops, some are more reasonable than others. Romney’s change from a social liberal when running in Massachusetts to a social conservative when running for the GOP nomination appears politically motivated as opposed to a true change in views. However sometimes it makes sense to reconsider a position one has taken. It might take time to accept a radical change in how things are done. In consideration of this, I’m willing to give Giuliani a pass on the flat tax.

If the goal is to have a tax plan which brings in the most revenue with the least pain, as opposed to simply soaking the rich, the flat tax might be worth considering. The complexity of the tax laws adds thousands of dollars in business expenses to my office which might be eliminated if the tax code wasn’t so complicated. A fortune is spent every year on tax shelters, reducing the pool of taxable money.

There are potential good points to a flat tax but I also look at it with some skepticism, wondering if it isn’t yet another scheme to get lower taxes for the wealthy while exaggerating the benefits. To really evaluate the flat tax we need good information on what rate would be necessary in order to raise current levels of revenue without creating increased hardship for those with lower incomes.

A problem with obtaining an analysis of this type is that political biases enter into the equation. Having Rudy Giuliani back the flat tax makes it more of a possibility than when Steve Forbes ran while backing the change. Perhaps this will lead to a more objective evaluation so that we could decide once and for all if this is really a good idea.

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