1. Archive

Forbe's one-note campaign // Flat-tax spiel is built on myths and misconceptions

It seems to be an unwritten rule of presidential primary politics that candidates may, with impunity, spout unmitigated flapdoodle in remote places like Iowa and New Hampshire.

But I found myself wondering, as I watched Steve Forbes' basic stump speech the other night on the PBS NewsHour with Jim Lehrer, whether the usual rule of forgiveness applies to self-styled outsiders and amateurs whose core message is that we are being manipulated and abused by "Washington politicians." Forbes, like Ross Perot before him, seems to assume so _ at least to judge by his sophomoric spiel.

Forbes, who's spending millions of dollars of his own money, is the premier advocate of a pure "flat tax." Everyone would pay at the same basic rate. There would be no deductions. A family of four earning about $32,000 a year would, says Forbes, pay no taxes at all under his plan.

If everyone's taxes were cut, it follows that federal revenues would fall and the deficit would swell. Unless spending were cut more sharply than either party has managed to cut it since the recent tax revolt began with Prop 13 in California and swept eastward with Ronald Reagan. Or unless a new round of tax cutting spurred economic growth to rates unseen in the modern era.

Unless, unless! Forbes' flat tax plan has more exit strategies than the late Benito Mussolini's army.

But the red meat in Forbes' basic speech is his proposition that the tax code needs to be dumbed down because it is the device by means of which "Washington politicians" shove us around. Take this device away, Forbes says, and you bring this manipulation to a halt.

Like all political speeches, and more so than usual, Forbes' basic speech is more notable for what it leaves out than for what it puts in:

1. Both tax cutting and so-called "tax simplification" have been tried _ recently. The tax cut was the Kemp-Roth bill, a huge three-stage cut in marginal income tax rates passed by Congress in 1981. To date it has cost some $3-trillion in new federal borrowing and equivalent interest charges.

Its sponsors claimed that it would stimulate savings and so energize the economy as to make up for the lost revenues because excessive marginal tax rates were discouraging work. They were flat wrong. It did neither. Revenues shrank and savings fell.

2. It is a myth, a ruse, a joke, to claim that politicians in Washington control our lives through the tax code. There never was a policy-neutral tax code, of course. Any tax plan contains debatable preferences and produces winners and, maybe, losers.

But what aspects of the tax code does Forbes have in mind? Accelerated depreciation of business investment? Deductions for capital losses? The popular home mortgage deductions (which his plan would eliminate)? Deductions for charitable contributions (also eliminated), which have the effect of inducing us to give money to causes and institutions of our own choosing, while claiming a tax break for doing so?

Where, exactly, in the present tax code is the shoving?

3. Tax simplification bills rarely simplify. The reason is itself simple. However intended, they become legislative Christmas trees. The public tires of following them at an early stage, while special interests with the needed stamina and long attention spans stay the course. Why does anyone imagine that a President Forbes, a rank amateur, would achieve what no other president has?

Why is Forbes giving this speech, over and over? Because he knows it goes over well with voters in Iowa and New Hampshire who thrill to improbable scenarios of tax avoidance? If so, it is hard to see what separates him from the cynical "Washington politicians" he blasts. Because he's a rich kid staking himself to a quixotic quest for self-financed notoriety? Or a greedy fellow who knows a flat tax would benefit him personally, to the tune of millions? I think not.

More probably, he is saying these things because he believes them. That is alarming. Should so credulous a person be elected to any office of honor, trust or profit under these United States, still less the presidency? When Bob Dole says Forbes' ideas are "risky," he commits generous understatement.

Washington Post Writers Group