- The Washington Times - Sunday, March 12, 2006

Sen. Sam Brownback’s effort to utilize the District as a testing ground for a voluntary flat federal income tax for D.C. residents is welcome news. The Kansas Republican, who chairs the Senate Subcommittee on the District of Columbia, presided over an exploratory committee hearing Wednesday that featured economists well-versed on the merits of the flat tax. The flat tax, a scion of supply-side economics, offers the District and the country a fair and simple tax plan, and the voluntary nature of Mr. Brownback’s proposal should allay some concerns of its critics.

In his opening statement before the subcommittee, Mr. Brownback noted that policy-makers and economists “should stop speculating and debating and actually test the idea of a flat federal income tax.” Currently, such models include Hong Kong, Ireland and several Eastern European countries. While the success of those countries provides valuable case studies, it does not offer as strong an argument for a flat tax as would success in an American city.

While supporters see the District as a foothold from which to launch nationwide flat-tax legislation, the District’s best interests should not fall by the wayside. Mayor Tony Williams says he “has some concerns about the concept but will hold off on a verdict until he sees the legislation.”

Mr. Brownback’s plan, like the “progressive flat tax” (PFT) championed in 1997 by D.C. Delegate Eleanor Holmes Norton, provides tax relief to bring back residents — particularly middle-class residents — of the District that have been forced out largely because of the higher taxes. In the last three decades, the population of the District has dropped a substantial 26 percent, while the population in the surrounding counties in Virginia and Maryland has increased — a fact that Mr. Brownback also cited in his opening statement. Currently, the highest local income-tax rate in the District (which applies to those who make more than $30,000), is 9 percent. In contrast, the national average is 5.5 percent, according to Chris Edwards, director of tax policy at the Cato Institute.

Mrs. Norton’s plan, which was strongly supported by this page, included several factors that Mr. Brownback should consider for his own proposal. Mrs. Norton’s plan increased the exemption level for singles to $15,000, heads of household ($25,000) and married couples filing jointly ($30,000), while maintaining deductions for charitable contributions and mortgage interest payments. Mr. Brownback, by contrast, indicated in his opening statement before the subcommittee that he was considering exemption levels of around $5,000 to $7,000 for each member of the household.

While a true flat tax eschews all deductions in favor of a lower rate, some serious consideration should also be given to retaining deductions for charitable donations and mortgage interest payments. Flat-tax proponents argue, with respect to the former, that charitable giving rises with income growth and would actually increase despite not being deductible. Excluding the latter, however, could have a deleterious effect on the real-estate market in Washington, jeopardizing the success of the reform.

Mr. Brownback’s proposal, by virtue of being optional, attempts an end-run around these concerns, and it deserves the bipartisan respect that was denied the Norton tax proposal almost a decade ago.

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