 On Point Vincent Carroll, editor of the editorial pages, writes his On Point column most weekdays. He is also an author and freelance writer. Reach Vincent Carroll at carrollv@RockyMountainNews.com. |
A flat tax, anyone?
With April's filing deadline creeping closer, it's tough to think of nice things to say about the tax code. Impossible, actually, if the federal code is the one we're talking about.
But the Colorado tax code is different. While it hardly warrants hosannas, the state income tax does at least have one thing going for it: It's flat.
A flat tax is easy to calculate, minimizes cheating, is least subject to constant tinkering and reduces the monumental transaction costs involving lawyers, lobbyists and accountants.
A flat tax is also fair.
Colorado's tax rate is 4.63 percent. Beginning in 2011, it will fall to 4.50 percent when the state budget surplus exceeds a certain size.
It was exactly 25 years ago that the scholars Robert Hall and Alvin Rabushka proposed a flat tax for the United States. They're marking the anniversary by releasing an updated version of their book The Flat Tax (Hoover Institution Press).
"We remain convinced, as ever," they write, "that the adoption of a flat tax would give an enormous boost to the U.S. economy by dramatically improving incentives to work, save, invest and take entrepreneurial risks. The flat tax would save taxpayers hundreds of billions in direct and indirect compliance costs. It would also shift billions of dollars from investments that reduce taxes to those that produce goods and services."
By setting the rate at 19 percent and exempting the first $25,000, they add, "all wage earners would pay less . . . than under the current system."
The U.S. moved toward a flat tax in 1986 when multiple tax rates were replaced by only two. Since then, unfortunately, the federal tax code has slid backward into hopeless complexity.
There is good news elsewhere, though. Since 1994, 15 nations, including Russia, have adopted a flat tax, and the movement continues to spread.
Jimmy Carter once declared the tax code "a disgrace to the human race." It was probably the least controversial comment he ever made - and it's just as true today.
Solar powers powerful
When is it good to subsidize the rich at the expense of the poor? Apparently when it's done on behalf of renewable energy.
At least that's one conclusion to draw from the legislature's effortless passage of House Bill 1281, which the governor signed Tuesday at the National Wind Technology Center in Boulder.
The new law doubles Colorado's renewable energy standards - meaning for the most part a huge boost for wind power.
Fortunately, wind power can hold its own in terms of price; and even if it couldn't, ratepayers would all share equally in the extra cost.
Not so with solar energy. Not only is it expensive, but half of the bill's solar mandate "shall be derived from solar electric technologies located on-site at customers' facilities." This is where the subsidy for the well-to-do comes in.
Who puts solar technology on their homes and then pockets a fat check from their utility to cover a major part of the cost? Not the average checkout worker at Wal-Mart, you can be sure.
But don't take my word for it. A recent report by the Colorado Public Utilities Commission says it all. That document reveals that since the passage of Amendment 37's renewable energy mandates, more than half of all homeowners who collected a solar subsidy live, incredibly, in Boulder County; moreover, their average incomes and home values far exceed those of the average Coloradan.
No wonder H.B. 1281's three main sponsors hail from Boulder (Rep. Jack Pommer), Genesee (Rep. Rob Witwer) and Snowmass Village (Sen. Gail Schwartz). They recognize a good deal for their prosperous constituents when they see one.
Vincent Carroll can be reached at carrollv@RockyMountainNews.com.
This is one topic that needs to be at the forefront of all the media until something is done to change the current system. The current system is so cumbersome that even those that write the tax laws don't know what they really say. It is time for a change.
Posted by Jeff Chase on April 3, 2007 12:41 AMThe fallacy in a federal "flat tax" is that 19 % won't cut it. It will have to be more like 25% to pay for our current government - and anyone who is deducting mortgage interest will probably pay more. Oh, and a flat tax is actually regressive, unless the cap is removed from the social security tax, and unearned income is subjected to the full self employment tax. (Social security taxes only wages up to the cap level, and nothing above)
"By setting the rate at 19 percent and exempting the first $25,000, they add, "all wage earners would pay less . . . than under the current system.""
Posted by AndrewP on April 12, 2007 08:56 PM