Pun Salad

In more than a century of state income taxes, only four states have ever transitioned from a graduated-rate income tax to a flat tax. Another four adopted legislation doing so this year, and a planned transition in a fifth state is now going forward under a recent court decision. In what is already a year of significant bipartisan focus on tax relief, 2022 is also launching something of a flat tax revolution.

In 1987, the 75th anniversary of state income taxation, Colorado replaced its half century-old graduated-rate income tax with a single-rate tax. It would take another 30 years for another state to follow suit, when Utah implemented a flat tax in 2007. Next came North Carolina in 2014, as part of that state’s comprehensive reforms, and most recently, Kentucky implemented a single rate of 5 percent in 2019. They joined five other states which already had flat taxes: Illinois, Indiana, Massachusetts, Michigan, and Pennsylvania.

Iowa is phasing in a 3.9 percent flat individual income tax by 2026, going from a graduated-rate tax that not long ago topped out at 8.98 percent. Mississippi will have a flat tax as of next year, with a 4 percent rate by 2026. Georgia’s income tax is now scheduled to convert to a flat rate of 5.49 percent, eventually phasing down to 4.99 percent. A court cleared the way for the implementation of Arizona’s transition to a 2.5 percent flat tax, which should happen, pending revenue availability, in 2024. In special session, Idaho adopted a 5.8 percent flat tax, replacing a four-bracket system. Missouri has been called into special session to adopt income tax rate cuts, but a flat tax could still be a consideration, soon if not this session, and a serious effort at adopting a flat tax is likely in Oklahoma next year.

Unlike many blue states, Massachusetts has resisted the temptation to raise taxes on high earners. That antitax fortitude is about to be tested. In November state legislators will ask voters to approve an amendment to the Massachusetts constitution adding a 4% surcharge to annual income over $1 million.

Massachusetts is home to arch-progressives like Sen. Elizabeth Warren and Rep. Ayanna Pressley, but many voters here remember the 1980s, when the state was derisively known around the country as “Taxachusetts.” A series of antitax popular initiatives in the 1980s and tax cuts enacted by Gov. William Weld in the 1990s reduced Massachusetts’ overall state and local tax burden considerably. Proposition 2½, which limits both the levels and growth of property taxes, was approved by voters in 1980 and remains sacrosanct. Among states with income taxes, Massachusetts’ flat 5% rate is on the low side. In neighboring Connecticut and New York, the highest earners pay 6.9% and 10.9% respectively.

For the last ten years I have been baffled as I watched the conservative movement devolve into a weird wing of progressivism—especially on economic issues. While once at least paying lip service to limited government, fiscal prudence, and personal responsibility, conservatives now ignore the size of government and fiscal responsibility. They increasingly call for a larger child tax credit, a universal basic income, and paid leave arranged and ensured by the federal government. Many conservatives now also proudly embrace tariffs, hyperactive antitrust, and industrial policy (often justified, of course, as necessary to ‘fight’ China).

Conservatives – or at least the more politically active ones – are reverting to their 1920s selves (See Matt Continetti’s book, The Right: The 100 year war for American Conservatism.) I failed to see this reversion occurring, in part because I moved to the United States in 1999 and was until recently fairly ignorant of the history of the conservative movement- and how the last forty years were more an exception than the rule.

I fear that this recent trend is just the beginning. It won’t be long before the conservatives’ platform is a full-on version of big government, big business, and big unions. It’s depressing.

At the dawn of the 21st century, countries in both the Global South and the former communist bloc were falling over each other to lower their trade barriers, liberalize their capital markets, and encourage their best and brightest to study in the West. Multinational firms were expanding their supply chains to bring workers from Mexico, China, Vietnam, India, and Russia into their fold. The internet had created entirely new ways for information to cross borders. Labor productivity was soaring and global poverty was falling.

U.S. politicians largely embraced this trend. Republicans and Democrats cooperated to negotiate trade agreements with both longtime friends and former foes. All this took place in a context of public optimism: In January 2000, 69 percent of Americans told Gallup they were satisfied with the country's direction.

Two decades later, things have not quite worked out the way many champions of free trade hoped at the end of President Bill Clinton's administration. Neither China nor Russia turned into liberal, free market democracies. Two decades of unending war have been peppered by financial crises, populist uprisings, and pandemics. Russia's invasion of Ukraine and the ensuing sanctions are merely the latest shock to the system.

Last week, in the wake of a report cataloging the catastrophic consequences of school closures, White House spokeswoman Karine Jean-Pierre suggested that Democrats did everything they could to get schools open “in spite of Republicans.” Lots of folks have dunked on this ridiculous claim, though fact checkers seem to be mostly MIA. Obviously, some of this is just partisan B.S..

But underneath it is exactly what I’m talking about. Forget Democrats and Republicans for a second. Liberals–good, decent, as pretty as George Clooney on the inside liberals—were overwhelmingly on the side of keeping schools closed. Teachers unions in particular behaved abhorrently and indefensibly—certainly, at least, in retrospect—in their effort to keep schools closed. When Donald Trump and countless others called for opening schools, they were accused of willingly endangering lives.

Now, while I think some teachers unions are literally villainous, I still don’t think they see themselves that way. And lots of liberals who were wrong—coercively wrong!—about shutdowns and school closings were surely trying to do the right thing as they saw it.

But groupthink married to an invincible and unreflective confidence that your side is always right led to all manner of mistakes. Emily Oster was villainized and attacked for dissenting from the groupthink.

Again, I have no objection to calling out the foibles of those you disagree with. That’s a huge and indispensable part of democratic and political discourse. It’s literally how progress is made in a free society. But an essential ingredient for such progress is an openness to admitting your “side” might be wrong. Epistemic closure is a human failing, not an ideological one. And while it can take courage to call out the people on the other side of an issue, a deeper political courage comes from being willing to admit that no one has a monopoly on political virtue—or facts. Sometimes, it helps to ask, “Am I the bad guy?” And – just sometimes – the answer might be, “Yes.”