Jeff's Lunchbreak

This entry is part of a series looking at Ben Carson's stance on political issues. For this series, I'm mostly looking at the issues identified on Carson's own website in the section, Ben on the Issues. I figured that was a good way to pick the issues he himself found most important to discuss, without anyone being able to accuse me of cherry-picking Carson's worst stances. An index of all the issues can be found on the first post in the series, Ben Carson - On the Issues, Part I.

This entry addresses Carson's stance on taxes. Here are a couple excerpts from Carson's site. Basically, he wants "wholesale tax reform" to make the tax code simpler, and seems to want to do away with "the IRS as we know it".

It [the tax code] is too long, too complex, too burdensome, and too riddled with tax shelters and loopholes that benefit only a few at the direct expense of the many.

We need a fairer, simpler, and more equitable tax system. Our tax form should be able to be completed in less than 15 minutes. This will enable us to end the IRS as we know it.

Not too much to disagree with so far. The tax code is too long and complex and should be simplified. I'm not so sure the IRS can be done away with, but let's ignore that for now and just focus on taxes.

Although he doesn't offer much in the way of policy on his website, Carson has proposed a flat tax (based on Biblical tithing) in other venues. Here's an example going back to one of Carson's op-ed pieces from the Washington Times in 2013, CARSON: Proportional taxation works because it's fair to everyone. But first, even though it's out of order from the article, Carson offered some statements that seem to be behind his rationale for a flat tax.

We need to abandon the idea that some people are too needy and pitiful to be required to make contributions.

Furthermore, if everyone is included in the tax base, it forces the government to be more frugal with the taxpayers' money.

It seems as if Carson thinks that right now, a sizable enough proportion of the population to worry about doesn't contribute to the tax base. Why else would he talk about people not "required to make contributions" or make a statement like "if everyone is included in the tax base"? This is no more true than when Romney made a similar claim back in 2012. Although not everyone contributes to federal income taxes, there are many more taxes out there. The Center for Tax Justice has a page on Who Pays Taxes in America in 2014?. They combined all taxes people paid, not just federal income tax, and then plotted it by income. Here's how it comes out:

Just to be clear, here are total effective tax rates broken down by income group:

So, overall taxation in the U.S. is somewhat progressive, but not a huge amount. If you look at the breakdowns on that page, state and local taxes tend to be regressive, putting more burden on the lowest income groups. To compensate, federal income taxes are progressive, making the total tax burden more proportional, and slightly progressive. But the overall point is, most people in the U.S. do pay taxes roughly proportional to their income.

Anyway, on to his proposal:

Many alternative forms of taxation are used throughout the world, but the model that appeals most to me is based on biblical tithing. Under that system, everyone was required to pay one-tenth of their income to the designated authorities of the theocracy.

He did go on to say in that article that 10% was only an example, but in other venues (see Politico), he's said that he only thinks it need to be as high as 10-15%.

There are two things Carson could be talking about with this flat tax, neither of which is an appealing option. If he's talking only about federal income tax (or even all federal taxes), then the above discussion makes it clear that a flat tax would put much more burden on lower income groups because of the other taxes they already pay. If he's talking about replacing the entire taxation system in the U.S., from city to state to federal, then he's talking about a monumental undertaking that quite frankly is unrealistic. There would be one big pot of money that people paid taxes into, that would then be distributed out to all the various levels of government. Who would do the collecting, and who would do the deciding on how much each level of government received?

Further, the tax rate isn't even the complicated part of the tax code. As explained in an op-ed on the Houston Chronicle, Steffy: Why the flat tax is flat wrong:

"I don't think the nominal rates are what confuse people," said Andrew Gardener, a certified financial planner and president of Houston-based Tanglewood Legacy Advisors. "The part of the tax code that tells you what your rate is, is two sentences. That's fairly simple."

The complexity comes in defining income.

The article goes on to give a few examples of this difficulty in defining income, and even when income is taxable. These are the complications that have built up in the tax code that need to be revised, but a flat tax doesn't address that.

This is another of the examples where I agree with Carson (at least partly) in identifying an issue, but not in his proposed solution, which would only make things worse.

Image Source for Ben Carson: Christian Post, Credit: Reuters/Jonathan Ernst

Updated 2015-09-24: Added graph of tax rates and a bit of extra wording to be more clear on the amount taxes are progressive.