When it comes to tax policy in America, the issue has become an extremely complex, intricate, and burdensome one to understand. The tax code contains volumes of provisions that few people comprehensively grasp. Moreover, tax policy is used to encourage certain types of behaviors over others through tax credits, exemptions, and penalties. Perhaps most importantly, the tax system is used in our country as a mechanism to redistribute wealth through progressively taxing income, coupled with an extensive welfare state that uses those taxes to provide social welfare programs for those in poverty.
Philosophically, my belief in limited government and protections against government intrusion lead me to condemn the use of government coercion through the tax code. As a rule, government intrusion is highly troubling. While this especially bothers me when the government coerces in a way that I disagree with, any coercion causes me distress. A great example for me would be with marriage - even though as a conservative I believe the government ought to protect the institution of marriage, it is precisely that the manipulation of the tax code that causes homosexual rights activists to call for marriage rights. If there was no economic benefit to marriage, perhaps there would be no debate here.
To answer the second question, as to whether the tax system ought to be progressive, I would like to devote the rest of this post to answering. Many people argue that the conservative, pragmatic view of taxes is in opposition to the liberal, idealistic view of tax policy. Quite simply, this is an unfair and wrong way to frame the debate. Both positions are based on ideals: alleviating poverty, affording equal opportunity, reducing unemployment, and gathering tax revenue for the government to provide important services (roads, defense, schools, etc.).
At this point, I'll advocate my position on taxes: the flat tax is flat-out necessary for the economic well-being of our country. In terms of effectiveness, many estimates have the flat tax creating roughly 5 trillion dollars in wealth in just a couple of years. The Laffer Curve is definitely not "voodoo economics." When countries drop their tax rates substantially, they collect more total tax revenue! If anyone is unfamiliar with the Laffer Curve, just post and I'll explain it more in a comment. Purely based on economic considerations, the flat tax is far superior than a progressive tax. Progressive taxes restrain entrepreneurship and the creation of wealth by creating systemic penalties for creating wealth. As taxes are higher on those that run businesses, they can't hire as many workers, and unemployment goes up.
Need evidence? Look at how America is quickly beginning to lose our global advantage economically. As globalization takes hold of the international economic scene, investing will flow to economies that have unburdensome taxes and vibrant economies. A couple examples: Ireland has slashed its corporate taxes from over 50 percent to 12.5 percent, unemployment has gone from double digits to 5 percent (less than American unemployment). Russia has gone to a 13 percent flat tax, and their economy immediately began to turn around and grow. Romania, Georgia, and Poland have all adopted flat taxes and seen immediate results.
A flat tax upholds all of the ideals that I mentioned earlier. The primary mechanism for alleviating poverty is to reduce unemployment. The redistribution of wealth over the last half-century has proven to be a colossal failure at alleviating poverty (2.2 percent increase in poverty, and we've spent billions of dollars in the process). It is time to realize that economic freedom and prosperity, through low, uncomplicated taxes is the best way to go.
So, let's adopt a flat tax of roughly 17-20 percent. A consumption based tax that taxes income just once will promote saving and investing. Overall tax revenues will increase as wealth is created. What we have now, our taxes will continue to go up, because raising taxes causes a stagnation in tax revenues, and law makers will always increase taxes to find money for new programs. As they raise taxes, overall tax revenue will not increase, and thus the spiral toward European socialistic tax practices begins. Let's avoid this, and go with a flat tax.
In discussion, I'd love to express why I'm for a flat tax instead of a fair tax (sales tax).