As I have said before, I would prefer to see the federal government either funded by the states directly, or, even better, by either national lottery or a uniform import duty, or both. However, if we must have a national tax to fund the federal government, I would support a flat tax scheme.

Why? The answer is simple: The flat tax is both fair and good for the nation.

It is fair because it taxes everyone an equal percentage of their income. In theory, we all receive the benefits of the government, so we all should pay. And, to be honest, even a flat tax is unfair in some ways. The poor receive an inordinate share of government benefits, so should really pay more. And, I know some leftists say the rich have more for the police to protect, so benefit more, but I would argue the poor live in more dangerous neighborhoods, and so actually have more to fear from crime, so they benefit more there.

The flat tax is also good for the nation, though only if two rules are imposed. I will explain:

1. The tax must be paid by everyone who earns even 1 cent in the course of a year. If we exempt people who earn under $10,000 or under $20,000 or some other number, or a floating scale depending on family size, or exempt anyone at all we create problems.

How so? Currently we have a large group who pay no taxes at all. We also have a group who pay very little in taxes relative to their earnings. Between these two groups, we have a substantial voting block who get all the benefits of increased government size without shouldering any costs.

Only by taxing everyone who earns anything at all, and taxing everyone at the same percentage rate will we interest everyone (except the completely destitute) in both reducing the size of the state and reducing the amount of taxation. Which leads me to the second rule...

2. There must be NO withholding. Our current system is based on a lie, or, to be a bit less harsh, a deceptive system.

Currently, most people never cut a check to the government. Or, if they do, they cut a check which amounts to no more than 5% of the taxes they have paid over the year. Instead, the government quietly removes their taxes via withholding, resulting in most tax payers seeing April 15 as a day they get a "nice" refund form the government, rather than the day they figure out how much they have paid over the year. And so we end up seeing taxes as a nice little surprise bonus every year rather than a massive theft of 1/3 of our earnings.

Instead we need to make sure that every citizen writes out a check every quarter, or once a year to the federal government, and that the check is for the FULL AMOUNT of taxes they owe. Otherwise we run the risk of people again becoming complacent and failing to realize just how much money the state is appropriating.

Only with these two rules will we ever have a hope of interesting the majority of voters in reducing the size of the government, and limiting the amount of taxation.

How?

If we are honest, we have to admit that most of us suffer to one degree or another from greed and envy, and most of us are also a little bit insecure. It is not one of the nicer facets of human nature, but that does not make it any less true.

And given that truth, it is not hard to convince the average voter that everyone else has just a little more than he does, and that they pay a little bit less. If only he could let the state take that little bit from them and redistribute it, he would be a little better off and the rest would just be a little bit closer to his lot in life. And so we end up with scheme after scheme promising to use confiscatory taxes against the OTHER GUY, to make YOU rich.

All of this is made easier by our tax system. With such a large base of non-payers, any promise of government generosity has a built in audience already. Add to that those who end up getting a rebate at the end of the year, and you have a clear majority who won't see tax increases as a loss, even though their pay checks may continue to shrink. In fact, they probably end up blaming their greedy bosses rather than the state which is actually taking the money, even to the point of supporting increased corporate taxes, just to punish the "greedy" bosses a bit more.

Only by making everyone aware of what all this generosity costs can we ever hope to stop this illusion that the government can create wealth, or even fairly redistribute that wealth. So we need a system that makes the greatest number active tax payers, and also makes those payers aware of precisely how much they are paying.

One last caveat:  If we institute this flat tax, I would also eliminate corporate taxes, along with any other form of taxation which is not assessed against individual income. (Excepting, perhaps, a uniform import duty. Though I would only allow the tariff in hopes of eventually transitioning from an income tax to a tariff-only federal tax system.)

Why? Well, the reasoning is simple. Corporate taxes are invisible, and they are distributed in unpredictable ways, allowing people to tax themselves, without realizing it.

An example: Your average populist voter may favor a tax against IBM to stick it to the rich. What he doesn't realize, is that the taxes are not paid by a fictional entity named "IBM", but are passed on to customers, or to shareholders. And this is where he hurts himself without thinking about it.

As a pension holder, he probably is one of the shareholders his tax is hitting. Rather than "sticking it to the big guys", he has just sent part of his pension off to the federal government.

But it is more than that. He may think he is not an IBM customer, so that won't hit him, but he is wrong. If IBM raises prices on cash registers, those increases make goods he buys more expensive. Or, if it sells computers to a credit card company, the increased costs raise his monthly credit card fees.

In short, by saying they are using corporate taxes to "soak the rich" the populists manage to make us tax ourselves while not realizing it. The truth is, the individual voters end up paying the taxes either way, but a corporate tax is uncontrollable, and ends up distributed unpredictably through the economy, while a direct flat tax is fairly and evenly distributed among every wage earning voter.

So, with a flat tax, and no other federal taxes, the voters themselves shoulder the entire burden evenly, and know exactly how much it costs them to get the government they voted into office.