... Meanwhile, at the state and local level, governments have scaled back property taxes and replaced them with income taxes and sales taxes. These taxes fall mainly on wages and on consumer goods, not financial and property income.
The trick has been for Republicans (and “Blue Dog” Democrats) to pose as “tax cutters” rather than tax shifters. Many wage earners now pay more in FICA paycheck withholding and other taxes cited above than they do in income tax. These changes over the past thirty years have reversed the 20th century’s tendency toward progressive taxation with a regressive tax system.
The 2000 Republican presidential primaries saw Steve Forbes run on a plank that would be the capstone of this tax shift off wealth: a “flat tax,” one that would do away with taxing the wealthy more than blue-collar labor. Mr. Forbes was laughed out of the presidential primaries for proposing this flat tax. It was promoted as being “tax simplification.” The problem was that it is so “simple” that it falls only on employees and their employers as a wage tax.
The details are much more regressive than seem at first glance. The flat tax actually would tax wage earners much more steeply than the wealthy, whose income it would largely exempt! The flat tax is supposed to fall on employment, not returns to wealth. Employees and their employers would pay the tax, as they pay today’s 12.4 per cent FICA paycheck withholding, but the flat tax would not be levied on financial and property income. ...
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