Another cornerstone of Bush's domestic agenda is tax "reform" - code for another tax cut. It will be given in the guise of the simplification of the tax laws, something that even I admit would be a good thing.
Bush's ideas seem to revolve around a couple of ideas, both of which are bad. The first is a "flat" tax, something that's been kicked around since the Gingrich era and even before. On the surface, this seems fair. Everyone pays a certain percentage of what they make, no ifs, ands, or buts. The rich pay more since they make more; the poor pay less since they make less. Everybody's happy, right?
Wrong. What flat tax advocates fail to realize is that as income decreases, the percentage of your income spent on essentials increases. So taxing someone who makes $20,000 a year and someone who makes $200,000 a year at the same rate is absurd - in the first case, you're taking away money spent on food, rent, water, and other necessary expenditures, while in the second case you're taking away disposable income that would otherwise be spent on luxury items (or saved). A flat tax, then, would hit the poor far harder than the rich, and lead to more income disparity.
Bush's second idea - a national sales tax - would be even dumber. Sales taxes are the ultimate in regressive taxes, since they tax necessary purchases and luxury items the same. Since the poor, by necessity, spend a higher percentage of their income, they will be taxed at a higher rate than those who can afford to save and invest. Fortunately, the idea of a national sales tax seems DOA in Congress.
I agree that the tax code needs to be simplified, if for no other reason than to make compliance a lot easier. However, some semblance of progressivity needs to remain if we are to have a fair tax system. Since I don't believe in disparaging Bush's solution without providing one of my own, I propose the following: a flat tax based on disposable income. "Living wage" information is available for most jurisdictions - these data can be used to calculate the least amount of income necessary to survive for a given family situation in a given place. (Here in Raleigh, it's $11/hour, or $22,000/year, for a single person living alone.) Also, a tax credit (akin to the earned-income tax credit) could be issued to those who make less than a living wage. Any income beyond the living wage is disposable income and is taxed at a flat rate - and no deductions whatsoever.
This system maintains progressivity at the lower income levels while making the tax code a lot simpler. It may not be a perfect idea, but it's a start. Of course, no one with any power to propose such a system would be reading this. But we can dream.