How Steve Forbes Would Turbocharge the ‘Molasses-Like Economy’

Steve Forbes made the flat tax the centerpiece of his two presidential campaigns. Now, he’s promoting the idea once again as he relaunches an organization called Americans for Hope, Growth and Opportunity to advance a pro-growth agenda.

“The flat tax is absolutely crucial to turbocharging our molasses-like economy,” Forbes, editor in chief of the magazine that bears his name, said at a Heritage Foundation event Monday.

The IRS estimated last year Americans spent 6 billion hours filling out tax forms, which equates to almost 3 million full-time jobs.

Forbes’ flat tax rate would be 17 percent, which includes several exemptions for adults and children. A family of four would have the first $52,000 of wages free of federal income tax. Forbes would also eliminate taxes for savings as well death taxes.

“You should be allowed to leave the world unmolested by the IRS, or as our founders would say, ‘No taxation without respiration,’” said Forbes.

Forbes would also eliminate double taxation of corporate taxes from overseas.

He said, “America is one of the few countries that believes if you earn money overseas you should pay taxes to that country as well to America. If you make money abroad should you pay it abroad if you make it at home you should pay it at home.”

In the first two years of a flat tax, Forbes’ estimation for economic growth would be 6 percent while yielding to 3.5 percent over time. This growth rate is equivalent to the rates that existed for the first 180 years of our country’s existence, he said.

Forbes faces challenges in convincing people to move to flat tax, specifically when people begin focusing on what they may lose. However, he made the claim that a simple solution stems from the fact that every person would receive a tax cut, eliminating the debate of who specifically is being helped and who is being hurt.

Choice would also increase. When the new system arrived, people would have the option of choosing a flat tax or continuing with the old system. That would leave the decision in the hands of the people to decide for themselves the system they deem more effective and efficient.

Forbes also debunked some common misconceptions about a flat tax. Some of that pushback comes from the argument that without a mortgage deduction, home ownership would decline. However, Forbes stated that if people are allowed to keep more of what they earn, that would then show a rippling effect of people being able and eligible to purchase more.

Forbes concluded with the push that simplicity is the key to flat tax. If changes are made everyone sees, he said, it eliminates any possibilities of enacting changes that would go unnoticed by the American people.

In regards to the current state of the U.S. tax code, Forbes concluded, “The only answer is, We have to take this beast, drive a stake through its heart, kill it, bury it, if the EPA allows such a thing to be buried, and hope it never rises again to terrorize the American people.”