From Deseret News archives:
Utah can help lead U.S. to flat tax, Forbes advises
System would boost development, he says
Let us count the descriptions: "A huge dead weight." "An abomination." "A source of corruption and corrosion." "Beyond reform." "A hideous code that nobody understands." "A monstrosity."
And that was just during a Wednesday morning speech.
But Forbes, president and chief executive officer of Forbes Inc. and the owner and publisher of Forbes magazine, said a flat tax system would boost economic development and government revenues, and that Utah can have a role in perhaps ultimately having a federal flat tax.
"Bottom line, what you do here in Utah is going to have an impact ultimately on the national debate," Forbes said during the annual meeting of the Economic Development Corp. of Utah. "If you do it here and show that states can do it and do it successfully, ultimately Washington will do it."
A low flat tax — Forbes suggests a 17 percent rate with "generous" exemptions — will create wealth for Americans and prompt economic growth through "more innovation, more jobs, more expansion." But, he said, people need to understand that taxes do more than raise revenue for government.
"Taxes are also a price and a burden. The tax you pay on income is the price you pay for working. That tax you pay on profits is the price you pay for being successful. Tax on capital gains? The price you pay for taking risks that work out," he said.
"And the precept is very simple, but too often not reflected in public policy: When you lower the price of good things — like work, productivity, success and risk-taking — you get more of those good things. Raise the burden and price on those good things, you'll get less of them. If you understand that and grasp that seemingly simple concept, which too many policymakers around the country and world don't, then you understand the imperative of a flat tax."
Such a tax will cause people to do things for the right reasons rather than deciding based on tax ramifications and scrambling for deductions and write-offs, he said.
Plus, flat taxes have been proven to work in several places already, including Hong Kong, Russia, Slovakia and Ireland, he said. "Make it simple. Make it low. It works," Forbes said.
Even in the United States, tax cuts have led to wealth-building and prosperous economies in the 1960s, 1980s and since May 2003, he said. Since that latter time, the U.S. economy has grown more than $2 trillion — more than the entire Chinese economy, he said.
