A few years ago, I proposed a major overhaul of federal taxation with a plan I called the dual‐rate income tax. (See here and here). The plan would get rid of virtually all credits and deductions, be favorable to savings and investment, and compress the current six‐rate system down to two lower rates.
I proposed the idea to the president’s tax reform panel in 2005, but the panel didn’t bite. Panel co‐chair, former Senator John Breaux, said: “Chris, I looked at your plan; I don’t like it.”
But this year, the two‐rate idea is catching on. House Republicans led by Paul Ryan have proposed a two‐rate plan called a Simplified Tax. (Please join us to hear Mr. Ryan speak about his plan on December 6). And yesterday, presidential candidate Fred Thompson included a two‐rate plan in his platform.
In the long‐run, Americans should follow the lead of more than 20 countries that have enacted flat taxes. Meanwhile, the two‐rate plan would represent a huge step toward that ultimate goal.
In February, Department of Homeland Security Secretary Michael Chertoff said the following about the REAL ID Act: “If we don’t get it done now, someone is going to be sitting around in three or four years explaining to the next 9/11 Commission why we didn’t do it.”
Alice Lipowicz of Washington Technology reported on REAL ID yesterday:
[Chertoff] and other DHS officials have said that older drivers present a lower terrorism risk and, therefore, might be allowed more time to switch to Real ID licenses. According to the Washington Post, DHS might extend the deadline to 2018 for drivers older than 40 or 50. Moreover, states will have more time to implement the act, Chertoff said.
DHS had previously extended the statutory May 2008 deadline for beginning implementation to December 2009 and recently set 2013 as the deadline for full implementation.
2013 is more than 5 years from now — 2018 is more than eleven. For all Chertoff’s urgency at the beginning of the year, has the Department abandoned its mission to secure the country?
Of course not. But Chertoff and the DHS were clearly trying to buffalo the Congress and the American people on REAL ID earlier this year. They haven’t succeeded.
Happily, this national ID system doesn’t add to our country’s security as its proponents have imagined. We are not unsafe for lacking a national ID. I explored all these issues in my book Identity Crisis.
If REAL ID were a sound security tool, pushing back the deadline for compliance would be a security risk, of course, as would reducing the quality of the cardstock used to make REAL ID‐compliant cards — another measure DHS is considering.
Forget security, though. DHS is straining to get the program implemented just so it can claim success and save some face.
“[T]hose who are singing a funeral dirge, I think they’re singing the wrong tune,” Chertoff said November 6th. Alas, as before, Secretary Chertoff is the one more likely to sing a different song.
Stephanie Coontz, a historian, suggests in the New York Times that government get out of the marriage business. Why, she asks, “do people — gay or straight — need the state’s permission to marry?”
For most of Western history, they didn’t, because marriage was a private contract between two families. The parents’ agreement to the match, not the approval of church or state, was what confirmed its validity.
For 16 centuries, Christianity also defined the validity of a marriage on the basis of a couple’s wishes. If two people claimed they had exchanged marital vows — even out alone by the haystack — the Catholic Church accepted that they were validly married.
So, she says, “Let churches decide which marriages they deem ‘licit.’ But let couples — gay or straight — decide if they want the legal protections and obligations of a committed relationship.”
It’s a great idea. Indeed, it’s such a good idea that I proposed it in Slate back in 1997:
So why not privatize marriage? Make it a private contract between two individuals. If they wanted to contract for a traditional breadwinner/homemaker setup, with specified rules for property and alimony in the event of divorce, they could do so. Less traditional couples could keep their assets separate and agree to share specified expenses. Those with assets to protect could sign prenuptial agreements that courts would respect. Marriage contracts could be as individually tailored as other contracts are in our diverse capitalist world. For those who wanted a standard one‐size‐fits‐all contract, that would still be easy to obtain. Wal‐Mart could sell books of marriage forms next to the standard rental forms. Couples would then be spared the surprise discovery that outsiders had changed their contract without warning. Individual churches, synagogues, and temples could make their own rules about which marriages they would bless.
One of the problems with this whole idea is that, as usual, the state has entangled itself in our lives. There are 1049 federal laws that mention marital status, most of them dealing with taxes or transfer payments. If marriage becomes a matter of private contract, the federal government will still have to decide whether to recognize all such contracts for the purpose of handing out marital benefits. And that doesn’t even get into custody, inheritance, property, next‐of‐kin, hospital visitation and other sorts of laws usually handled at the state level. Just another example of how the intrusion of the state into every corner of society makes it difficult to privatize any aspect of life. But it’s good to see the idea getting some discussion.
Notwithstanding last week’s agreement to hear the D.C. guns case — the announcement of which managed to be both later than originally expected and earlier than expected after the decision’s postponement — the Court has gone back to putting itself out of business by reducing its workload to nothingness. (How’s that for judicial restraint?)
The Court has granted review to 51 cases this term, putting it about at the same pace as last year, when only 68 cases were decided after argument. This is down from the 70‐low‐80s of the previous 15 years (except 92 in 1997 – 98), which itself is down from the 100 – 110 pace before that (and, for example, 129 in 1973).
But forgetting the numbers game, this week the Court is hearing four arguments, in cases involving: 1) private causes of action under ERISA (Larue v. DeWolff); 2) the deductibility of financial advisers’ fees from trust/estate taxes (Knight v. Commissioner of Internal Revenue); 3) whether New Jersey may construct a natural gas facility on the Delaware River over Delaware’s objection (New Jersey v. Delaware); and 4) the federal preemption of a (Maine) state law that blocks the delivery of Internet‐bought tobacco to teenagers (Rowe v. New Hampshire Motor Transport Assn.). Not too exciting, other than that case 3 comes in under the Court’s rare original jurisdiction (meaning no state or lower federal court first ruled on the matter).
On Friday, the justices are scheduled to hold a private conference to discuss more pending cert petitions, with orders on those expected next Monday. The safe bet is that they’ll deny them all — though there is one interesting case (McDermott v. Boehner) where one sitting congressman is suing another over the latter’s disclosure to reporters of an illegally taped (and embarrassing) phone conversation. Stay tuned.
A news story and op‐ed in the Washington Post recently noted that about 35 million Americans, or more than 10% of the population, are “food insecure.” It sounds like there is a massive underclass of people in the nation who are so poor that they can’t get enough to eat and are going hungry. No doubt that is the idea that many articles want to put across on the reader.
But is the hunger problem really that big? Let’s go to the official definitions and data at the Department of Agriculture:
It seems to me that it’s only the “very food insecure” folks who might be sometimes going hungry. Less than 3% of the population is very food insecure at any time during a given month, and that drops to less than 1% on any given day.
Douglas Besharov has argued that the main food‐related health problem today is obesity, not hunger. Poor Americans are generally suffering not from too little food, but from too much of the wrong kinds of food.
According to federal data, about two‐thirds of American adults are “overweight” and about half of those are “obese.” Those rates are actually higher for adults below the poverty level. Similarly, children below the poverty line are more likely to be overweight than other children.
Despite these modern realities, food subsidy programs continue to support an out‐of‐date model of increasing the caloric intake of low‐income Americans. It’s time to cut them. See further discussion here.
Adding to Dan’s note, here is today’s story from Tax Notes International (no link):
The Bulgarian parliament passed a new flat tax on income on November 16, making Bulgaria the seventh EU member state to adopt a flat tax regime …
The new flat tax will replace Bulgaria’s progressive, three‐bracket income tax, with a flat 10 percent tax on income starting in 2008. Bulgaria had already slashed the corporate tax from 15 percent to 10 percent in 2006 …
Bulgaria is the latest in a number of Central and Eastern European countries that have replaced progressive systems with flat tax regimes. The flat tax revolution was pioneered by Estonia in 1994, and since then about 20 countries in Central and Eastern Europe have followed suit.
In this country, many pundits and presidential candidates would reverse President Bush’s modest reduction in the top income tax rate from 40% to 35%. Those rates are more than three times higher than the new flat tax rate in Bulgaria, a former communist country.
In the first test vote, the 10 percent flat tax was approved in Bulgaria by an overwhelming margin. If the Bulgarian experience matches what happened in other nations, the low‐rate flat tax will be adopted, the economy will grow faster, and the government will collect more revenue. But just to show that there are some things that remain constant, the bureaucrats at the International Monetary Fund will continue to urge countries not to adopt this simple and fair tax system. The Sofia Echo reports:
Parliament approved on November 23, in first reading, amendments to the Income Tax for Natural Persons Act, which will introduce a 10 per cent flat tax rate starting from January 2008. The amendments were supported with 152 against 36 votes, with four abstentions, Bulgarian news agency (BTA) said. The flat tax rate will replace the current progressive tax system.