10 percent, no exceptions.

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Carson's 'Tithing' Is Sounder Than Rubio's Tax Plan

Amity Shlaes serves as presidential scholar at the King’s College and board chairman at the Coolidge Presidential Foundation.
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It's Ben Carson's turn to get real on taxes. This is what some Republicans have been saying since Donald Trump released details of his tax plan.

Carson, who is still nose to nose with Trump in the polls, has so far stuck with the simple idea he first began mooting years ago: a 10 percent flat tax on income modeled on the biblical tithe.

A tithe sounds primitive, something involving pottery shards and sheep. The notion doesn’t fit into the political culture of a primary, let alone a general election. Tax plans do not come as bolts from the clouds. They come as spreadsheets from the National Bureau of Economic Research.

Trump took advantage of such impressions in the last Republican debate to mock Carson. Trump suggested that in rejecting progressivity, Carson was simply betraying ignorance of (tax) civilization. “One thing I’ll say to Ben is that we’ve had a graduated tax system for many years.”

But for Carson to back off from his plan would be a shame. His tithe reminds us that our modern tax culture features its own idols, themselves worth smashing.

Politicians worship the progressivity to which Trump referred. This is the system under which tax rates rise as workers move up the income scale. Just about every American tax plan put together by lawmakers in the past century has been progressive. Out of anxiety over seeming unjust to the poor, even self-proclaimed flat taxers tend to insert lower rates for modest earners in their plans.

But it’s not clear that voters themselves actually understand progressivity. Indeed, a recent study by the American Accounting Association suggested that seven in 10 liberals who say they support progressivity indicate a preference for flat rates when asked about specific examples.

Voters generally mistake progressivity for proportionality. And Carson’s 10 percent tithe favors proportionality.

“A Wall Street Mogul who made $10 billion would be required to give $1 billion,” Carson writes in his memoir.  “A Harlem schoolteacher who made $50,000 would be required to give $5,000.” Along with imposing that flat rate, Carson says, “of course, get rid of tax loopholes.”

A second idol Carson breaks is the range for the top tax rate. In the U.S. this range is set in granite at between 20 and 40 percent. At 10 percent, Carson’s tithe feels “utterly implausible,” as the left-leaning Citizens for Tax Justice put it. With so much revenue lost, the contention is, the government will run dry as a desert. 

But here again, Carson creates an opening. Experience, never mind scholarship, suggests that when a nation drops its tax rate substantially below that of other countries, it will draw commensurately substantial amounts of business, and extra tax revenues. No evidence has materialized that this phenomenon ceases when you drop your statutory top tax bracket by 75 percent, to 10 percent from the current 39.6. 

So Carson’s bet that a bold low rate will undam an ocean of revenue is hardly crazy. What’s more, the fervent fashion in which Carson preaches against deficits, citing Proverbs, suggests he has the will to narrow deficits with cuts.

Another tax idol is the child credit. No social conservative candidate is worth his salt until he crusades for tax changes that give an advantage to families with children.

Senator Marco Rubio recently provided an example of this when he proposed an expansion of existing child credits so generous, it would give up a good trillion dollars in federal revenue. By math the Rubio campaign itself commissioned, that shift won’t yield a drop of additional economic growth.

Carson doesn’t so much reject the child credit as parade past it. At a 10 percent tax rate, even the largest family will benefit.

Yet another icon is tax cuts for the poor. For decades politicians have removed lower earners from the tax rolls in the name of giving them incentives to work and earn more. Carson wants to increase taxes on the poor. The practical reason is to broaden the tax base: great idea. But he also adds: “Robbing people of dignity by allowing them to be freeloaders is not compassionate.” Taxing people gives them "skin in the game," he says, a stake in the common American venture.  

Of course, talking about taxes today also features taboos. One taboo is against praising great wealth, even among those candidates who sometimes push for lower tax rates on the rich.  Carson doesn’t merely praise wealth, he glorifies it: “What made America into a great nation was the fact that we said, that guy just put in $1 billion, let’s create an environment that’s even more conducive to his success so that next year he can put in $2 billion.” Lower rates encourage rich people to work more productively and hire more people.

No, it won’t be easy for Carson to stand his tithe ground. Already he has let it be known he is open to permitting his tithe to be remade into, say, Mike Huckabee’s Fair Tax, which buys off lower earners with a cashback early “prebate.” It’s also quite possible that the surgeon candidate, if he stays near the top in the polls, will indeed succumb and advocate the standard Republican compromise mishmash. To all of which one can only reply: Heaven forfend. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Amity Shlaes at amityshlaes@hotmail.com

To contact the editor responsible for this story:
Katy Roberts at kroberts29@bloomberg.net