Is the Flat-tax Going to Become a Key Issue for Social Conservatives?

 

tax exempt statusOn NRO, David French reports that one of the attorneys arguing in favor of gay marriage in the Supreme Court admitted that tax exempt status for institutions that oppose gay marriage “is going to be an issue.” The institution under discussion was colleges — Bob Jones University in particular — but surely this would also become an issue for hospitals and other institutions and charities run by religious orders and eventually even churches, temples and mosques (well, maybe never mosques).

My question is whether we who harbor the definition as marriage as being only between a man and woman (like those who, you know, take Jesus as His word) will soon be considered Constitutional heretics. And if that happens, would we be better off doing away with all of the lawsuits in our future about whether a charity is worthy of tax exempt status by doing away with all such exemptions now? Should we focus on a flat tax which would allow more people to keep more money and be able to than give even more generously to the religious institutions they value?

And as a bonus, no more tax exemption for The Clinton Foundation.

So, should we make Steve Forbes a patron saint?

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  1. Ricochet Member
    Ricochet
    @Batjac

    The only way to regain personal liberty in this country is with a flat tax.   Are we free if you have to worry about an audit if you express the wrong opinion?

    Obama will look like a piker if Hillary gets her hands on the IRS.

    • #1
  2. MarciN Member
    MarciN
    @MarciN

    The story of Gordon College, a small seminary in Massachusetts, is an ongoing cautionary tale of how complicated life has become for religious people. At least President Obama reacted intelligently to Gordon College’s letter of request for a religious exemption.

    This is the latest development, which is actually encouraging and a tiny bit humorous.

    • #2
  3. Byron Horatio Member
    Byron Horatio
    @ByronHoratio

    I don’t know if it’s the conservative position to hold, but I’m against tax exempt statuses for institutions. Churches made a deal with the devil when they agreed to constrain their 1st amendment rights in exchange for tax exemption. This is a predictable situation that they now find themselves in. The right and honorable thing would be for them to forsake their exemptions and operate more according to their faith. But don’t try and have it both ways.

    • #3
  4. user_645127 Member
    user_645127
    @JenniferJohnson

    Byron Horatio:….Churches made a deal with the devil when they agreed to constrain their 1st amendment rights in exchange for tax exemption…

    I wonder if you’re referring to the Johnson Amendment:

    Since its passage in 1954, the Johnson Amendment has been applied to prohibit what a pastor says from the pulpit concerning candidates who are running for elective office. This means that under current IRS regulations, a pastor cannot say anything from the pulpit that may constitute support for – or opposition to – a political candidate.

    It has not always been this way. For almost the first 200 years of America’s history, pastors frequently spoke out with great boldness about the great moral and social issues of the day and about the candidates running for office…

    From Speak Up Movement.

    • #4
  5. Ed G. Member
    Ed G.
    @EdG

    Byron Horatio:I don’t know if it’s the conservative position to hold, but I’m against tax exempt statuses for institutions.Churches made a deal with the devil when they agreed to constrain their 1st amendment rights in exchange for tax exemption.This is a predictable situation that they now find themselves in. The right and honorable thing would be for them to forsake their exemptions and operate more according to their faith.But don’t try and have it both ways.

    I disagree Byron. The difficulty in divining eligibility notwithstanding, it’s pretty clear to me that not all accumulations of assets should count as “income” or “sales” subject to tax.

    For instance: several parents within our Cub Scout pack are organizing a fundraising effort to help a disabled scout from our pack to purchase some equipment that will help him to stay in  the school he currently attends. They will be accepting donations, selling raffle tickets, etc. Should any of that accumulation of assets be taxed?

    • #5
  6. Ricochet Member
    Ricochet
    @Manny

    A pure flat tax will never happen.  There is no way you can eliminate all progressivity given the make political make up of this country.  And I could never support elimination of charitable contributions.  With all that charities do in this country and the world, that would be a disaster.  Nor am I sold on elimination of home mortgage deduction.  I don’t know about the economics, but people would not buy or invest in their homes if home values did not increase.

    Frankly my perception is that the flat tax is one of those dangling fishes to get political contributions from conservatives.  There isn’t a chance in hell that you would get any Democrats and probably most moderates to go along with it.

    • #6
  7. Ricochet Member
    Ricochet
    @Manny

    Batjac

    The only way to regain personal liberty in this country is with a flat tax. Are we free if you have to worry about an audit if you express the wrong opinion?

    Obama will look like a piker if Hillary gets her hands on the IRS.

    Why?  What does a flat tax have to do with personal liberty?  Taxes are going to be collected no matter what.  What does progressivity have to do with it?  Reducing the power of the IRS is a separate issue.

    • #7
  8. BThompson Member
    BThompson
    @BThompson

    A flat tax would be a MASSIVE tax increase to a very large segment of the country, not the least is the working poor. This is pure political suicide and a triumph of ideology over common sense.

    • #8
  9. Ed G. Member
    Ed G.
    @EdG

    Manny:A pure flat tax will never happen. …..

    Frankly my perception is that the flat tax is one of those dangling fishes to get political contributions from conservatives. There isn’t a chance in hell that you would get any Democrats and probably most moderates to go along with it.

    From my perspective as a tax accountant, I look at the tax simplification most people envision as being mostly fantasy. Taxation will never be as simple as people would like.

    What is income? Seems like a simple question until you start considering specifics. Indeed, income is technically any assets received. That’s not particularly satisfactory, though, because we can come up with exceptions without even thinking about it. Does the source or purpose matter? Is it gross or net? Which items are legitimate deductions and which are not?

    Of course we can simplify and eliminate loopholes and outright cronyism, but it’s inherently complicated. Which is why I support sales tax as the preferred method of simplification and reduction of government influence peddling.

    • #9
  10. Ed G. Member
    Ed G.
    @EdG

    Otherwise, no I don’t think the flat tax will save SSM dissidents. The reason is that the majority will need to come to some agreement on legitimate exceptions. If certain positions are illegitimate then it’s unlikely that we’ll get agreement on making an exception.

    • #10
  11. Aaron Miller Member
    Aaron Miller
    @AaronMiller

    A national sales tax in lieu of the national income tax would be the single greatest strike against big government. It would not support half the programs and agencies we have today… and that’s a very good thing.

    It would be ideal, but I doubt it will happen because both parties and their voters basically prefer the status quo.

    Unfortunately, adjusting the present system offers no hope either because politicians on both sides benefit electorally from a constant game of benefits, penalties, and loopholes. The mere existence of the corporate income tax (in effect, double taxation on employee incomes), let alone the high rate, demonstrates how unserious Republicans are about just taxation.

    • #11
  12. Aaron Miller Member
    Aaron Miller
    @AaronMiller

    Big governments have always coveted the moral authority of churches.

    Beyond the most basic duties of defense and infrastructure, politics is typically a practice of group ethics (ethics being the application of general moral principles to specific scenarios). So politics is never more than a short step away from religion anyway.

    In other words, big government by nature is incompatible with religious freedom. If we desire more freedom, we must start eliminating programs and agencies.

    • #12
  13. MarciN Member
    MarciN
    @MarciN

    Ed G.:

    Manny:A pure flat tax will never happen. …..

    Frankly my perception is that the flat tax is one of those dangling fishes to get political contributions from conservatives. There isn’t a chance in hell that you would get any Democrats and probably most moderates to go along with it.

    From my perspective as a tax accountant, I look at the tax simplification most people envision as being mostly fantasy. Taxation will never be as simple as people would like.

    What is income? Seems like a simple question until you start considering specifics. Indeed, income is technically any assets received. That’s not particularly satisfactory, though, because we can come up with exceptions without even thinking about it. Does the source or purpose matter? Is it gross or net? Which items are legitimate deductions and which are not?

    Of course we can simplify and eliminate loopholes and outright cronyism, but it’s inherently complicated. Which is why I support sales tax as the preferred method of simplification and reduction of government influence peddling.

    I have been saying this for years. It will always get down to what is considered income. Thank you.

    • #13
  14. Ricochet Member
    Ricochet
    @WardRobles

    Yes, Sts. Steve and Robert E. Hall and Alvin Rabushka, authors of The Flat Tax. Contributions are usually made without consideration and hence would not be taxable, anyway. Investment income would become taxable. Church members will have the same amount to give if the loss of deductibility of their contributions is offset by lower rates. The increase in economic growth would more than offset the tax increase to churches in the long run. The real prize that should bring together libertarians and conservatives is to deny politicians the ability to make promises and tell their voters that someone else is going to pay.

    • #14
  15. BThompson Member
    BThompson
    @BThompson

    Ward Robles:Church members will have the same amount to give if the loss of deductibility of their contributions is offset by lower rates.

    Seeing as how a flat tax would be a huge tax increase for close to half the country I think this point is misguided.

    The increase in economic growth would more than offset the tax increase to churches in the long run.

    This is a statement made purely on faith. It is nothing but an ideological claim unsupported by real evidence.

    • #15
  16. Ricochet Member
    Ricochet
    @Manny

    Ward Robles

    Yes, Sts. Steve and Robert E. Hall and Alvin Rabushka, authors of The Flat Tax. Contributions are usually made without consideration and hence would not be taxable, anyway. Investment income would become taxable. Church members will have the same amount to give if the loss of deductibility of their contributions is offset by lower rates

    But the incentive is gone.  We would be just like Europe where they don’t give much to charity.

    • #16
  17. Ricochet Member
    Ricochet
    @WardRobles

    BThompson, well, there is that book I cited. One of the authors keeps the following blog: http://flattaxes.blogspot.com/. Lots of countries have flat taxes. A list and their tax rates can be found at the link. Check it out!

    • #17
  18. BThompson Member
    BThompson
    @BThompson

    The fact that other countries have flat taxes doesn’t say anything about how a flat tax would translate into a windfall for Churches.

    • #18
  19. Aaron Miller Member
    Aaron Miller
    @AaronMiller

    It is government entitlement and investment programs, rather than taxes, that most depress private acts of charity.

    When people perceive aid as a role of government and believe programs are addressing the problems, the need for private actions seems less. And, unlike individuals and church communities, governments seemingly have inexaustible resources to throw at problems.

    In addition, private efforts come to rely on government funds. Big government is dictatorial even without direct financial influence, attempting to control private actions through regulations and thereby frustrating private efforts.

    Modern citizens need to ask themselves if their ancestors were all bastards who didn’t care about the poor, the sick, the lame, and the downtrodden. Somehow, human beings managed to help neighbors in need before the advent of totalitarian government. We cannot regain those traditions while everyone looks to politicians for salvation.

    • #19
  20. BThompson Member
    BThompson
    @BThompson

    After reading a bit more about how a flat tax would work, it seems that it could be implemented without raising the effective tax rate for most people. The question becomes how this would affect government revenues.

    I don’t believe that “starve the beast” approaches have worked at all. Government spending has not decreased despite GOP efforts to incentivize that outcome by cutting taxes. So a flat tax that isn’t revenue neutral would be a big problem.

    Also, supply siders are sure that incentivizing capital investment and allowing the wealthy to keep more of their money will make economic growth explode. I don’t know that the economy is suffering from a lack of capital investment. There doesn’t seem to be much appetite to invest in capital these days despite interest rates that are virtually zero. That tells me that regulatory reform and elimination of corporate cronyism are much more important than a flat tax.

    And I agree that flat taxes won’t simplify the role of the IRS or eliminate the lobbying efforts to tweak the tax system nearly as much as proponents claim.

    • #20
  21. Caleb J. Jones Member
    Caleb J. Jones
    @CalebJJones

    Seth Mandel makes an interesting point in Commentary (https://www.commentarymagazine.com)

    The Left Frets: What If the Supreme Court Recognizes the Dignity of Christians?

    Seth Mandel

    04.30.2015 – 5:45 PM “Liberals may want to argue that people have a right to be treated with dignity by the state, and therefore gay couples’ right to marry should be anchored in constitutional law. But how comfortable are they with the idea that Christians are people too?”

    There seems to be more to consider than just the tax angle.

    • #21
  22. user_75648 Thatcher
    user_75648
    @JohnHendrix

    Aaron Miller:A national sales tax in lieu of the national income tax would be the single greatest strike against big government. It would not support half the programs and agencies we have today… and that’s a very good thing.

    I am assuming that by National Sales Tax you’re alluding to the FairTax.  If so, I don’t agree with your assertion, “It would not support half the programs and agencies we have today“.

    A few years ago I ran the numbers and I worked out that–as advertised by the FairTax folks–the FairTax delivers essentially the same funding as our current Income tax code.   So how do you conclude that half of the programs and agencies would not be supported by the FairTax?

    • #22
  23. user_75648 Thatcher
    user_75648
    @JohnHendrix

    The problem with the Flat Tax is that our current tax code started as a flat tax. Put another way, our current tax code is a flat tax after 100 years of political tinkering.

    This means that a Flat Tax will just be a reset–after which the same political forces will resume nudging the tax code back toward something like our current tax code. I suppose that this transformation will be quicker this time since everybody already knows where the bones are buried.

    Ed G’s astutely points out  (in #9) that ultimately any Income Tax–flat or otherwise– raises the question, What is income?   That political argument never stops and won’t be stopped by a Flat Tax.

    Of course the FairTax shares the same risk. Since the FairTax is a consumption tax all passing the FairTax will do to this political process is change the question from What is income? to What is consumption?

    • #23
  24. Aaron Miller Member
    Aaron Miller
    @AaronMiller

    No, John, a simple national sales tax. No prebate. No complications or addendums whatsoever.

    The best protection against obscure political manipulations via the tax code is to strip politicians of qualifiying options. They can raise or lower the tax only, in obvious view of voters.

    Let private charitable organizations worry about special burdens.

    If DC doesn’t have to tighten its belt, the tax rate is too high.

    • #24
  25. user_75648 Thatcher
    user_75648
    @JohnHendrix

    Aaron Miller:No, John, a simple national sales tax. No prebate. No complications or addendums whatsoever.

    Hmmm… But without a something like a prebate the the objection will be that that this national sales tax will fall disproportionally on the poor.  This will generate activism to exempt food, medicine, and other  “essentials”.

    Consequently, these exemptions will cause the  tax rate on everything that is not “essential” to be higher.

    Consequently, the political game will be to have politicians to deem your product–whatever your product might be–to be “essential” so as to dodge the sales tax.

    Afterward we are back to the same mess we currently have with the Income Tax: endless political jockeying over the tax code.

    Now, I don’t mean to be pulling a strawman argument on you. You called for something different.   I essentially described the foreseeable political process whereby the simple national sales tax you proposed would transform into a mess similar to our current  tax code. The obvious political attack on your proposal would be the regressive of a simple national sales tax.  How would you politically defend your proposal from such an attack?

    In contrast, the FairTax’s prebate immunizes the FairTax this political attack because the prebate prevents the poor from paying the FairTax.  While the prebate does add a rather minor complication to the FairTax it protects the FairTax from the attack that it will cause the poor to pay taxes.

    • #25
  26. user_75648 Thatcher
    user_75648
    @JohnHendrix

    Aaron Miller:If DC doesn’t have to tighten its belt, the tax rate is too high.

    But DC will just borrow the money if tax revenue is too low.  Tax revenues doesn’t constrain federal spending.

    • #26
  27. user_75648 Thatcher
    user_75648
    @JohnHendrix

    Aaron Miller:The best protection against obscure political manipulations via the tax code is to strip politicians of qualifiying options. They can raise or lower the tax only, in obvious view of voters.

    Well, the only thing that can truly strip politicians “of qualifying options” is a Constitutional Amendment.  Otherwise If the majority of the politicians feel pressure to to  modify the national sales tax they will just do it.

    The prebate is a means for providing political cover for not creating exceptions and complicating the FairTax.

    Put another way, if the majority of the voters are persuaded that the national sales tax is too unfair to tolerate because the poor are taxed when they purchase food and other essentials then the politicians will naturally respond by making some accommodation in the tax code.

    The prebate provides cover for politicians to argue against the complicating the FairTax for the benefit of the poor because the poor isn’t paying the FairTax anyway.

    • #27
  28. Ricochet Member
    Ricochet
    @Batjac

    Manny:

    The only way to regain personal liberty in this country is with a flat tax. Are we free if you have to worry about an audit if you express the wrong opinion?

    Obama will look like a piker if Hillary gets her hands on the IRS.

    Why? What does a flat tax have to do with personal liberty? Taxes are going to be collected no matter what. What does progressivity have to do with it? Reducing the power of the IRS is a separate issue.

    Reducing the power of the IRS IS the issue.  Does Lois Learner ring a bell with you? Does an unelected bureaucrat with the power to decide if you get a tax exemption based on your politics sound like freedom to you?

    • #28
  29. user_75648 Thatcher
    user_75648
    @JohnHendrix

    Batjac:

    Manny:

    The only way to regain personal liberty in this country is with a flat tax. Are we free if you have to worry about an audit if you express the wrong opinion?

    Obama will look like a piker if Hillary gets her hands on the IRS.

    Why? What does a flat tax have to do with personal liberty? Taxes are going to be collected no matter what. What does progressivity have to do with it? Reducing the power of the IRS is a separate issue.

    Reducing the power of the IRS IS the issue. Does Lois Learner ring a bell with you? Does an unelected bureaucrat with the power to decide if you get a tax exemption based on your politics sound like freedom to you?

    The FairTax eliminates the IRS because it eliminates the Income Tax on both individuals and corporations.

    The states collect the FairTax because it is a sales tax.  The states remits the revenues to the federal govt.  To be sure, under the FairTax the federal govt will still need a much smaller bureaucracy to administer receiving the revenues from the states.

    Collecting the Income Tax requires you to report how you earned your money to the federal govt.  Under the FairTax the federal govt no longer has any interest in how you earned your money.

    Libertarians and others are concerned about privacy.  (See Snowden, PATRIOT ACT, etc.)  These things are weak beer–when it comes to invading your privacy–as compared to you getting financially naked before the IRS every April 15th.

    Put another way, the FairTax would be one of the most privacy increasing acts in decades because both individuals and corporations can discontinue describing their fiscal activities in details to the IRS.

    In summary, if the Flat Tax is good because it reduces the power of the IRS, then the FairTax is better because it eliminates the IRS.

    • #29

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