Burton Abrams: the flat tax as a transparency benchmark
In the March 30, 2014 episode, Burton Abrams described “tax expenditures” as hidden subsidy programs and argued that a tax system with no deductions would make those subsidies visible. He asked listeners to imagine a system that charged the regular income tax with no deductions at all, then had the government send a check for a share of mortgage interest after seeing how a taxpayer spent money; he said the federal budget would be a trillion dollars higher if those subsidies were shown as line items. Bob Zadek responded by naming the flat tax and the fair tax as the alternatives being described. Abrams said there is a trillion dollars in these subsidy programs and that a transparent system would let people debate whether such subsidies are socially desirable. He noted that many countries do not allow mortgage-interest deductions, that Canada does not have that subsidy, and that the United States spends hundreds of billions of dollars subsidizing homebuyers. Worst Ten Economic Mistakes of the 20th Century (2014)
Earlier in the same episode, Abrams and Zadek debated Medicare and Medicaid as economic policy. Abrams distinguished Medicaid, which he described as a welfare program for people in severe financial distress, from Medicare, which he called a retirement program that replaces private retirement planning with a government-paid program. He said money put into Medicare is money not saved for retirement and is consumed instead, with long-run detrimental effects on the economy. Zadek framed Medicare as a wealth transfer from working Americans to retired Americans and said retired Americans are the wealthiest demographic class by age group. Abrams agreed that Medicare transfers wealth but said many current recipients believe they paid for the program through FICA taxes and that taking away what was contractually agreed to would be a disturbing change of plan. Zadek took issue with the entitlement claim, saying what retirees paid in is minuscule compared with what they took out and that Medicare is a pay-as-you-go system. Abrams responded that this was mostly true for earlier retirees, citing Harry and Bess Truman as cards number one and two in the Medicare system, and said current retirees have paid in during their working lives. Worst Ten Economic Mistakes of the 20th Century (2014)
Bob Zadek: defining the flat tax and the national sales tax
In the June 8, 2014 episode, a caller identified as Dino, who said he attended San Francisco State University and had started a Young Americans for Liberty club there, described a plan to advocate a Fair Tax, a national sales tax, combined with a guaranteed income, alongside repealing labor regulations including minimum wage laws and union collective bargaining rights. Zadek responded by explaining that a Fair Tax is a type of national tax and that it comes in various forms, sometimes a national sales tax and sometimes a flat tax with no deductions and no exemptions. Dino clarified that the proposal he was discussing was a national sales tax. Zadek said the advantage of a national sales tax is that sellers collect it with minor bookkeeping, there are no tax returns to file, and individuals do not make economic decisions because of tax benefits, which provides for better allocation of capital. He said the disadvantage is that it falls disproportionately on the poor. Dino said the guaranteed income would offset that regressive nature and that a consumption tax is less susceptible to business-cycle fluctuations, providing more stable revenue. Zadek compared California’s heavy dependence on an income tax, which he said produces wild fluctuations in revenue based on capital gains and the health of the tech industry, and said a consumption tax would make revenue more predictable for states and the federal government. Matt Zwolinski on Bleeding Heart Libertarianism (2014)
Steve Horwitz: the flat tax and the tax code’s marriage bias
In the March 2, 2018 episode, Steve Horwitz described how the US income tax code historically favored a particular kind of family. He said that when a married couple files jointly, the secondary earner—the member who might not work and might stay home with children, usually but not always the woman—has their first dollar taxed at the same rate as the primary earner’s last dollar. He said this was set up intentionally in the 1940s and adjusted later to encourage stay-at-home moms and discourage women from working. Horwitz said there are ways to change the tax code so married couples get neither favoritism nor penalty, and that moving to a low flat tax would remove what he called the secondary-earner bias. He also argued that one cannot simply pull the plug on state-recognized marriage without considering how other policies would need to change so the impact is lessened. Getting the Government (Back) Out of Marriage (2018)
Ben Powell: Georgia’s flat tax as part of a reform package
In the July 28, 2019 episode, Ben Powell described Georgia, a former Soviet republic, as a free-market success story. He said Georgia made essentially no reforms for over a dozen years after the Soviet Union collapsed, then a politician named Saakashvili came to power and brought in Kakha Bendukidze as finance minister. Powell described Bendukidze as radically reforming the economy: firing government bureaus, privatizing property online and transparently so the highest bidder gets it, eliminating taxes, lowering rates, and getting a flat tax. He said the reforms also included limiting government debt and debt issue, and that Bendukidze fired the entire traffic police force in a day, after which crime went down. Powell said Georgia went from being unranked in an economic freedom index, meaning at the bottom of over 150 countries, to the top 10 freest economies in the world. He said Georgia remains relatively poor at about $8,000 per capita income but has been growing rapidly since the Rose Revolution. Zadek interjected that Georgia and Estonia are interesting pockets of free-market capitalism among former Soviet countries. Socialism… Still Not Cool (2019)
Across episodes
The flat tax is touched on in four episodes across five years, but the excerpts show no single argument developed from one treatment to the next. Abrams uses a deduction-free income tax as a hypothetical to expose hidden subsidies; Zadek defines the flat tax and national sales tax for a caller; Horwitz recommends a low flat tax to remove the secondary-earner bias; and Powell lists Georgia’s flat tax among many reforms. The speakers differ, the contexts differ, and the excerpts do not show one episode building on or responding to another.
What the sources do not cover
The excerpts do not state the specific rate or structure of any flat tax proposal, nor do they name a bill, statute or ballot measure. They do not report revenue estimates for a flat tax, nor do they describe how a flat tax would treat deductions other than the mortgage-interest and charitable-contribution examples Abrams mentions. The excerpts also do not state whether any of the speakers endorsed a particular flat tax plan, and they do not give the outcome of any legislative effort to enact one.