Orin Hatch (R-UT) has a somewhat confusing statement on taxation

American taxpayers are skeptical that the answer to our fiscal problems is for them to sacrifice more, when almost half of all households are not paying any income taxes,” said Hatch. “Those who promote higher income tax rates in the name of equality and deficit reduction need to come clean about what this means.  With the income tax base so narrow, meaningful reductions in our deficits would require far more than taxes on the rich.  Those tax increases would squarely hit the middle class, which the President and others have said is off limits. In short, the quest for social equality results in fewer resources and worse outcomes for the nation as a whole and the poor in particular

I’d like to make a couple of notes because I think many of my friends on the right, for their own sake, are going down the wrong road on this one.

  1. The narrowness of the base depends on the share of income going to the taxed. If say only the top 400 households in America paid income tax but they took 90% of the income then the base would be fairly broad. Its just important to remember that we arguing that the budget cannot be balanced on taxes on the rich. It depends on how rich they are.
  2. Letting the income tax wither and die is in the long run interests of reducing the impact of taxation on growth. As is strengthening Social Security through payroll tax increases. It is already almost the case that the majority of US federal revenue come from a flat tax on labor. Imagine that, do you think you could ever convert the income tax to a flat tax on labor? Yet, the mechanics are making that happen on their own.
  3. Raising taxes for the rich by ending the cap on the payroll tax is the quickest way to move the US even further down the road towards a flat tax nation.