Ted Cruz is one to watch. And let us not wait until after he has served two spectacular terms as President of the United States before we engage some rising Michelangelo to carve a noble statue of him.
For the newly minted senator from Texas, who has already gotten off to a good start by speaking out against killing little children in their mother’s womb and has proposed to defund ObamachaosTM, now proposes to sweep away the hated, corrupt Infernal Revenue “Service” and replace today’s graduated income tax with a flat-rate tax that is the same for everyone.
Flanked by Michele Bachmann and Rand Paul, he contributes a fine article to this month’s “End the IRS” special issue of Whistleblower, laying out his proposal to lead the charge against the IRS in the U.S. Senate. You’ll find it at the WND Superstore, and you really, really won’t want to miss it.
As details inexorably emerge of the high-level coordination within the IRS of its monstrous campaign to target taxpayers who had displeased the White House by daring to be Christian or conservative or – like me – both, the urgent necessity of wiping out the IRS is self-evident.
One should not think that the terrific trio’s proposal is a mere spiteful knee-jerk reaction against an agency that – like so many others on the taxpayer’s dime – has forgotten who its employers are.
Behind this proposal there is evidence that on the right in politics a new thoughtfulness and maturity is emerging, ready to take the place of the hard left’s naïve and now-failed strategy of buying the votes of the reckless and the feckless by throwing money Uncle Sam hasn’t got at them.
Now that the ridiculous over-reaction of the global classe politique to the over-egged pudding of supposedly catastrophic supposedly man-made supposed climate change is stuttering to a timely end (for even Australia is now to scrap its absurd carbon tax just as two star GOP witnesses demolish the case for the Sanders/Boxer copycat carbon tax at a Senate hearing), it will become easier for all to see that the most urgent problem of government today – how to afford welfare without going bankrupt – can no longer be ignored.
I was one of the first to research the flat-rate tax when I worked for Margaret Thatcher in the mid-1980s. During my final meeting with her, I outlined a detailed proposal to bring both taxation and welfare under the same department of government – the Treasury.
This was – and is – no mere rearrangement of administrative deckchairs. The left’s electoral strategy of imprisoning the poorest in their poverty so that nearly all of them can never escape depends for its undoubted success upon what was once an inadvertent consequence of taxpayer-funded welfare but is now cruelly deliberate.
The tax and welfare systems pull in opposite directions. If an unemployed person takes a job at a low enough wage to make his perhaps-limited skills affordable to his employer, he will become worse off by working than by food stamp-collecting. Welfare economists call this the “unemployment trap.”
Suppose a worker is employed but at a low wage. If his employer offers him a slightly higher wage, the combination of extra income tax and progressive withdrawal of welfare as his earned income rises makes him worse off earning more than earning less.
In Britain at the time when I advised Margaret Thatcher, the top rate of income tax on the rich was 40 percent (still way too high to get the maximum revenue out of them, but that’s another story). But the top combined rate of taxation and welfare-withdrawal for the poor was – get this – a dollar and 7 cents on the dollar. Welfare economists call this the “poverty trap.”
These two traps that imprison tens of millions either on low wages or no wages originally came about by accident as piously intended tinkering by well-meaning but economically illiterate politicians throughout the West created ever-more-complex taxation and welfare systems administered by separate departments.
I explained to the prime minster that the first step toward making Western government affordable again was to simplify both taxation and welfare and stop the two systems fighting one another, crushing low-income families and locking them into perma-poverty.
A flat-rate tax is, of course, much simpler than a graduated tax. In particular, it is essential to do away with the income-tax threshold below which no one pays tax. Not only for simplicity but also, more importantly, to bring the poverty and unemployment traps to an end, it is essential that everyone pay tax from the first dollar of income onward.
That appears to drag millions into tax who do not pay it now. But on the welfare side of the account – and you will begin to see why the two systems should be managed by a single department – everyone, in work or out, rich or poor, is given the same guaranteed minimum weekly welfare payment, just enough to live on if you share accommodation with others.
But won’t that cost a fortune? No. All we are doing is replacing the tax-free allowance with a cash welfare payment. So how does that paper-shuffling make any difference? Because the cash welfare payment is never withdrawn as the recipient’s earned income rises. So, even if his employer gives him quite a low wage, that wage is over and above his welfare benefit, so it always makes him better off and never makes him worse off.
Remove the crippling cash disincentive to labor that is the key feature of today’s tax and welfare systems, and a significant percentage of those who cannot afford to work will do so.
The “Democrats” win elections by deliberately trapping people in poverty and unemployment so that they will vote left. The Republicans will win elections by deliberately springing people free from the poverty and unemployment traps so that they will become well enough off to vote right.
In the West, poverty is no longer necessary. Sensible reforms of tax and welfare, such as those now being slowly, patiently introduced by Iain Duncan-Smith in the U.K. in the teeth of opposition from the totalitarian establishment, would abolish it forever.
Poverty endures solely because the left gain votes from it. Ted Cruz is one of the few politicians in either House of Congress who understand this. And he cares enough to do something about it. That is why he deserves his statue.