Flat tax plan constitutes 'affirmative action' for rich

I take issue with Mark Joseph Goldenson's piece "When it comes to taxes, flat is finest" (Friday). Mr. Goldenson asserts that a universal flat tax will "end double taxation on corporations," thus encouraging "savings and investment," and(the Wall Street mantra) "economic growth." This language has that odd "trickle down" ring to it. A number of important considerations are conveniently obviated from Goldenson's case. Among these is a more forthright analysis of the capital gains tax. There are reasons why proponents of the flat tax evade the discussion of such issues.

The real hidden agenda behind the flat tax folly is "capital gains." Presently, capital gains on investment are taxed at a rate of 28 percent. That's 11 percent less than what average earned income of most Americans is taxed at (39 percent).

Ninety-two percent of capital gains income goes to individuals making $50,000 or more annually; 69 percent to those making over $100,000. ( The average annual U.S. income is only $23,000.) The adoption of a flat tax will eliminate the tax on capital gains tax completely. This also serves as a significant handout for large corporations, since they are capable of assessing some profits as capital gains for tax purposes.

Furthermore, if everyone across the board pays a "flat tax," then the person who makes $230,000 will proportionately pay 10 times less income tax than the person who makes $23,000! This may have been the rationale of the Papacy in the 12th century, but it is hardly deserving of consideration today.

The fact that Mr. Goldenson offers to "sever a limb" to execute the flat tax as law is proof of the utter dearth of ideas at the forefront of U.S. politics today.

One of the reasons for this is the fact that few issues are on the agenda which would benefit the majority of the citizenry rather than the privileged few.

The total net worth of the top 1 percent of the U.S. population is presently equal to the bottom 90 percent! Income disparity has not been so great since 1929 (see Zepezauer and Naiman, 1996).

The rate of individual income tax in the United States is the lowest of all western industrial countries - especially for those who make enough to evade such levies. Do the affluent really need another handout? I think that we really should end affirmative action ... for the rich.

By James F. Tracy (letter)
Arizona Daily Wildcat
February 20, 1997