You’re not alone. In fact, a majority of Americans see the system as unfair, particularly towards the middle class, self-employed and small business owners.


WASHINGTON – Taxes rise and fall from one administration to the next, but the unpopularity of the income tax system is constant. An Ipsos Poll finds that almost six of 10 people say the system is unfair, a percentage virtually unchanged from two decades ago.

The perception of unfairness is spread fairly evenly across income groups â€â€? though their reasons may differ. More than half of those who make less than $50,000 a year said it’s unfair, and more than six in 10 of those who make more than $50,000 felt that way.

In fact, unhappiness with the tax system was spread fairly evenly across income groups, age groups and education levels.

Hmm…could a new flat tax proposal proposed in the October issue of Fortune gain some open ears come election time 2008?

First we’d get rid of the across-the-board $9,000-per-person exemption in the Forbes plan. Why should billionaires like Bill Gates get an exemption? Forbes is giving too much money away to rich people. We’d save that exemption money and give it instead, in the form of a rebate, to the bottom third of earners, those who bring home roughly less than $25,000 for a family of four.

Second, Forbes ignores the 12.4% Social Security payroll tax (split between employer and employee). Currently, income over $90,000 a year is not subject to the tax. We don’t think it’s fair that a $50,000-a-year autoworker has to pay payroll taxes on all his income while a million-dollar-a-year auto executive does not. Under our proposal all wages would face the same income and payroll tax rates.

I’ve said before that I like this new flat tax proposal because it takes into account the reality that people aren’t going to be okay with everybody having the same rate and not pay any extra. This plan offers rebates for those who can’t afford to pay taxes. True, it doesn’t make it an honest-to-goodness flat tax, but if we ever hope to simplify the tax code and cut out all the crap, more common sense and less ideology is needed.

And yes, much like Charles Murray’s plan to reform the Welfare State in his book ‘In Our Hands’, this new flat tax idea calls for accountability for those who want rebates. How? They have to show they’re buying health care and save for their retirement. That retirement part isn’t in Murray’s proposal, but maybe it should be.

In any event, I think it’s pretty interesting how Charles Murray’s ideas and these flat tax ideas intersect, with that intersection being health care for everybody. And if that’s the only way we’re going to get health care into the hands of everybody (meaning the poor), then I think Dems need to take a serious look at these “new” ideas and start to have a dialogue. Because these are the ideas that could ignite the imagination of the nation.

Business Unhappy With The Tax Code?