Back in the day, when I was trying to start a career in entertainment, I took a job making $300 a week. I was paid every two weeks and my take home pay was $488. I was required to work from 9am to at least 7pm with 1 hour for lunch, which adds up to 45 hours a week (with no overtime). This means I was making about $6.66 before taxes, about $1.51 more than the California minimum wage at the time. There were no benefits.
I was happy to get this job. My boss told me that 30 other people wanted my job. It took me about 2 years of résumés and interviews to get this job. I went to college and accrued $20,000 in debt in order to qualify for this job.
The catch is that my rent was about $400 a month. And that was for a bachelor apartment in pre-rejuvenated Hollywood. Gas prices were about $1.40 a gallon and the state of California wanted me to pay a $300 smog fee for the privilege of registering a car from outside of California. Since my apartment had no off-street parking, I spent a year or so trying to figure out how to avoid the parking ticket boot since I was driving (and parking) a car with expired Ohio license plates. I did various illegal things, trying to save up my money for the smog fee, until a court somewhere decided that it was an unconstitutional fee.
The point is this: from my take home pay of $976 a month, I had about $400 left to pay for food, clothes, and entertainment. Which meant there was a lot of fastfood and matinees, and no money for unavoidable car fees. And if there was a way I could have those $224 in taxes that were withheld from my paycheck each month, I would have done it in a heartbeat. When you’re trying to decide if it’s worth spending $10 on cold medicine, $224 is a lot of money.
What proponents of a flat tax (or opponents of the progressive tax system in general) fail to realize is that none of life’s basic expenses are prorated, based on how much money you make. Sure, you can choose to buy cheap or expensive cars, to eat at McDonald’s or at a fancy French restaurant, but if you’re trying to pay for the basics like gas, bread, or milk, nobody is going to cut you a break if you’re poor. You’re going to spend $100 for groceries, whether that’s 10% of your salary or .01% of your salary. Nobody is going to say, hey, you’re a millionaire so your parking citation is an equal percentage of your income as it is for the poor guy who mows your lawn. If you park illegally, you’re going to get penalized $50, regardless of whether you make $50 a day or $50 an hour.
It might sound extremely fair to tax everybody the same, reasonable rate. Whether the rate is 10%, 20%, or 30%, the amount of taxes you pay would be an equal portion of your salary as everybody else. But it won’t be equally burdensome. When you make $1 million a year you have a whole lot more flexibility to pay for anything — whether it’s taxes, a mansion, or an Extra Value Meal at McDonald’s — than the guy who’s making minimum wage. Sure, it might feel like an unfair burden to pay a higher tax rate because you’ve worked hard to get your success, but when you gross $16,640 a year (CA minimum wage x 40 hours x 52 weeks), the difference between a 20% rate and a 15% rate is about $70 a month. Which for somebody barely getting by could mean renting in a safer neighborhood, buying new clothes for a job interview, or buying healthier food for your children.
Or buying 16 gallons of gas.