Thursday, March 26, 2015

The psychology of the flat-tax

Under a 20% "flat tax" scheme, someone making $10,000/year pays $2,000 tax while someone making $100,000/year pays $20,000 tax, i.e. $18,000 more tax. It's somehow OK for the richer person to pay $18,000 more in taxes than the poorer person just because he or she makes more money, but having that person pay $18,001, $19,000, or $25,000 more in tax would be an injustice. This makes no sense whatsoever. - Matt Bruenig
If we can't find an explanation for the flat tax's popularity in morality, we should probably look elsewhere. Fortunately, its advocates are fairly explicit:

  • "It ought to be just a simple, one page postcard," Ted Cruz told Fox News over the weekend.
  • "The Internal Revenue Code's headache-inducing complexity is a scandal," Reason writes.
  • "We need a new tax system that is simple, honest and fair," Steve Forbes wrote in one of the founding texts of the flat tax movement, Flat Tax Revolution.
Strip away implausible language about justice and calls for the flat tax invariably devolve into calls for simplicity. Here is where I think the debate takes a revealing turn. Advocates for the flat tax always come armed with an endless parade of examples of unjustified tax code rules that, in their totality, convey an impression of byzantine complication. And yet, if you subject any one rule to a minimal degree of informed scrutiny, it usually stands on its own merits. It is at least debatable, which is how it survived legislative debate and became enacted into law.

In this sense, the argument against a complex tax code is often better understood as an objection to the complexity of the world that built it and the world that it applies to. This is entirely understandable. As Adorno writes,
Naive persons fail to look through the complexities of a highly organized and institutionalized society, but even the sophisticated one cannot understand it in plain terms of consistency and reason, but are faced with antagonism and absurdities... Thus people even of supposedly "normal" mind are prepared to accept systems of delusions... [which] reduce the complex to simple and mechanical inferences, doing away with anything that is strange and unknown...
Understood this way, the flat tax makes perfect sense: it's an opiate against the oppressive and alienating complexity of the modern world. It quite literally "provides a short-cut by bringing the complex to a handy formula and offering at the same time the pleasant gratification that he who feels to be excluded from educational privileges nevertheless belongs to the minority of those who are 'in the know.'" Confronted with the massive edifice of our tax system, we can invest extraordinary energy into understanding the problems that afflict our world and the efforts we make, through taxation, to address them -- or we can accept gross simplifications, and sneer at the know-it-alls who defend the system and make everything more complicated then it needs to be.

So on one hand, I think we can understand policies like the flat tax as a symptom of late capitalism, with all of its attendant, proliferate social complication; and on the other hand, we can understand them as a kind of psychological defense mechanism against this problem, which victims are well aware of but do not actually understand.

This unconscious dimension of the psychology behind the flat tax deserves more thought. There is, as Matt notes, something odd about a right-wing tax plan which cares less about proportion than rigidity - which is violated whether the government collects $7000 or $1 over a 20% rate. This fixation on purity, the anxiety and paranoia over contaminating the tax code with sinister complications, and the obsession with essentially arbitrary numbers and sequences (9-9-9, anyone?) are all symptoms with a pretty straightforward diagnosis.