Time to Go Full Steve Forbes or John Linder on the Tax Code

With the launch of a tax reform draft by House Ways & Means Committee Chairman Dave Camp (R-Mich.), Republicans have opened themselves up to criticisms from interest groups across the political and influence spectrum. Wall Street is having a fit – the bill raises taxes on them, to finance future bailouts – and even the NFL is getting in on attacking the plan.

Which is all the more reason it's time for either a flat percentage income tax or, even better, a national sales tax.

In Washington, policy discussions rightly include strategic thinking. “What can pass in today's climate” is as important as “what is good policy,” for example. A less charitable version of this strategic thinking, especially in an election year, is “what can get me re-elected?"

House Ways and Means Committee Chairman Dave Camp (R-MI). Credit: Chip Somodevilla/Getty Images

Politico reports the tax plan furnished by Camp is getting hammered for not reducing taxes enough for top earners, unlike the Reagan reform of 1986. Those making over $1 million would see a one-half of one-percent reduction in taxes, and those claiming between $500,000 and $1 million would see an increase of 2.4 percent. On the other side of the equation, middle-income Americans would see enormous benefit, according to Camp's calculations.

Any tax reform plan is going to anger constituencies that want continued special treatment. Such is human nature – everyone wants tax reform until it impacts them. And it is to Camp's credit that he even attempted modest reform in light of opposition by leading Republicans such as Sen. Mitch McConnell (R-Ky.) and non-support from Speaker John Boehner (R-Ohio), especially in an election year.

Given these difficulties, Republicans should make sure taking the heat is worth it. Which is why a flat tax or national sales tax should be put forth, promoted, and made a centerpiece of policy proposals in 2014.

According to Politico, Camp's reform eliminates hundreds of loopholes and credits, but leaves many more in place than it eliminates.

A national sales tax, as regularly introduced into Congress by former Rep. John Linder (R-Ga.), would eliminate all loopholes and say “sayonara” to the income tax itself. Every person in the nation would instead pay taxes on many items purchased, and receive a check up to the poverty rate to offset how basic costs like food and housing burden lower-income earners more than the wealthy.

To be fair, this reform has no chance of passage, due to Democratic and some Republican opposition, and would leave the GOP open to the criticism that it wants to hurt the poor - even though the economic growth that would result from no loopholes for the wealthy and poor alike would be well-distributed among all income levels, thus offsetting the regressive nature of the plan.

Which brings us to the flat tax, first made famous in Steve Forbes' 1996 campaign for president. This plan is exactly what it sounds like: Elimination of loopholes so all people pay the same percentage of their income to the federal government.

This tax is inferior to the sales tax in one significant respect – it leaves the unjust income tax in place – but it offers a chance for real reform to the code that is more easily sold in light of what would be enormous media and political criticism. And, unlike Camp's much-criticized plan, it offends special interests equally while promising enormous growth for the American people. It would also bring in enormous revenues for the federal government's coffers – revenues that should be applied directly to either deficit reduction or a refund back to the American people.

Critics argue that a flat tax or sales tax would bring about major opposition by Democrats, some Republicans, and special interests. That's true. But since we're seeing that already, why not take a stab at reform that would really get Washington out of the bedrooms, wallets, and homes of the American people, and puts more money in the hands of those who earn it?

Again, Camp deserves credit for taking even a medium-sized step in the right direction. But if this is the best plan Washington's leading politicians can come up with – and, again, he is facing heat even from top people in his own party despite the very modest nature of the draft – needed substantial tax reform is never going to happen.

So conservatives might as well encourage Camp to go full-on with reforms that start from the far-right rather than the middle. Criticism is going to come either way, so reform might as well be worth the fight.

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