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Archive for Tuesday, April 23, 1996

PRIZE-WINNING ECONOMIST TOUTS BENFITS OF A FLAT TAX

April 23, 1996

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A U.S. economist visiting KU says a flat tax isn't the nutty idea detractors maintain.

A Nobel Prize-winning economist Monday proposed passage of a constitutional amendment that ties the hands of politicians and mandates equal federal taxation.

Net result: a flat tax.

"Everybody would be taxed at the same rate on every dollar of income," laureate James Buchanan said during a speech at Kansas University.

Buchanan, who won the 1986 prize for applying economic principles to political decision making, said the nation's recent discourse about a flat tax could, and should, be more than just a fad.

Sure, Steve Forbes dropped off the Republican presidential radar screen ballyhooing his 17 percent flat tax idea.

But, the departure of Forbes offers President Bill Clinton an interesting political opportunity, Buchanan said. To defeat Sen. Bob Dole, R-Kan., in November, Clinton could run to the right and endorse some sort of flat tax.

A Republican-dominated Congress might go along with the idea if Clinton remained committed, he said.

Buchanan, economics professor at George Mason University in Fairfax, Va., said a constitutional amendment would be required to make a flat tax work. It would get taxation closer to the ideals of law -- justice, fairness, equity.

"It would reduce in a major way the investment in what we'd call gamesmanship of taxation," he said.

He said it was the natural inclination of politicians to stick loopholes into the tax code to benefit special interests.

A critical issue when debating the flat tax is the rate of taxation, he said. The danger is that government could set the tax too high, he said.

He said another drawback to the flat tax was that it might distract the public's attention from dealing with the federal deficit.

"Getting the budget in balance is much, much more important than getting a flat tax," the economist said.

Buchanan spoke to 75 people at the law school. His talk was sponsored by KU Law and Organizational Economics Center.

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