Jeff Wartman

As has been widely reported lately, Obama Treasury Secretary appointee Tim Geithner has some tax problems.

The largely seamless confirmation hearings for President-elect Barack Obama’s cabinet nominees hit a snag today after Senate Republicans said they intend to raise questions about a former housekeeper for Treasury secretary nominee Tim Geithner, as well as questions about multiple years in which Geithner did not pay Social Security or Medicare taxes while employed at the International Monetary Fund.

These things tend to come up from time to time on Cabinet appointees from nearly all incoming Presidents.  However, this time it’s a bit different.

This isn’t Zoe Baird.  This is much more serious.  Regardless of other mistakes or indiscretions, it is irresponsible to bring someone on as Treasury Secretary if they don’t understand or attempt to understand the tax code.  It’s one thing for the Secretary of Veteran’s Affairs to make a mistake on his taxes.  It’s quite another for someone who has been chosen to formulate and recommend tax policy to make large scale mistakes on his taxes.

This is the latest in a long line of Democrats with tax problems.  Congressman Charles Rangel has also admited that he doesn’t understand tax policy, made numerous mistakes on his own taxes, and failed to pay taxes on rental property he owns.  Rangel is also Chairman of the Ways and Means committee, the chief tax writing committee of the House of Representatives.

How can the men we trust to write, advise and implement tax policy not understand how to pay their own taxes?

Hypocrisy knows no bounds.

This all returns to one central point:  the tax code needs to change.  Why are people so afraid to discuss wholesale changes to the tax code?  Want a solution to all these problems?  The plan has been public for years.

What Is a Flat Tax?

Unlike the current system, a flat tax is simple, fair, and good for growth. Instead of the 893 forms required by the current system, a flat tax would use only two postcard-sized forms: one for labor income and the other for business and capital income. Unlike the current system, which discriminates based on the source, use, and level of income, a flat tax treats all taxpayers equally, fulfilling the “equal justice under law” principle etched above the main entrance to the U.S. Supreme Court building. And unlike the current system, which punishes people for contributing to the nation’s wealth, a flat tax would lower marginal tax rates and eliminate the tax bias against saving and investment, thus ensuring better economic performance in a competitive global economy.

There have been several flat tax proposals over the years, all of them based on the pathbreaking proposal developed by two Hoover Institution economists.  While no two plans are identical, they all share common features that fix the major flaws of the current Internal Revenue Code. Simplicity and fairness are also natural consequences of these component features of tax reform.