Ben Carson’s 14.9% Flat Tax Would Really Be 30.2 Percent Tax for Most

Presidential candidate Ben Carson, who had previously outlined his general support for a flat tax based on the biblical “tithe,” laid out more details of his tax plan earlier this week. The plan’s $9.6 trillion 10-year cost puts it squarely in the footsteps of the tax giveaways proposed by other candidates. Carson is pitching the plan as a 14.9 percent flat tax that would be simpler and fairer, but in reality the plan would be a major giveaway to the wealthiest Americans and, in fact, would impose a 30.2 percent tax rate on most working people. 

The Carson campaign’s PR effort is focused on the flat 14.9 percent tax with which he would replace the current graduated federal income tax. But Carson’s campaign literature fails to mention that the plan would leave in the federal payroll (FICA) tax. Counting the employer and employee side of the FICA and Medicare tax, both of which are generally thought to fall ultimately on workers, the payroll tax clocks in as a 15.3 percent tax rate on salaries and wages. Carson would leave this unchanged. So when Carson claims his plan would tax “income at a uniform 14.9 percent rate,” he’s understating the actual tax rate on working families by a factor of two. Overall, the wages of working families would see a tax rate of 30.2 percent under Carson’s tax plan.

In addition to the move from a graduated-rate to a flat-rate tax, Carson would repeal virtually all of the income tax deductions and credits currently in place. Everything from the Earned Income Tax Credit and the Child Tax Credit to itemized deductions would be eliminated. In lieu of these tax breaks, Carson would introduce one new deduction that exempts income below 150 percent of the federal poverty line, imposing only a small “de minimus” tax on this income.

Carson’s plan also contains the usual array of goodies for the best-off Americans: estate tax repeal, a zero tax rate on capital gains, dividends and interest, and an end to the alternative minimum tax. CTJ’s new analysis shows that fully two-thirds of the tax cuts under Carson’s plan would go to the very wealthiest 1 percent of Americans. This is roughly twice as big a share as this best-off group received from the tax cuts engineered by President George W. Bush more than a decade ago. 

As a new Citizens for Tax Justice analysis shows, on balance these proposed changes would have a disastrous effect on both tax fairness and the federal budget. Not only is the plan misleading when it asserts everyone would pay a 14.9 percent flat tax, the poorest 40 percent of Americans would see big tax hikes and federal revenues would be decimated by $9.6 trillion over ten years.

Carson’s plan, like the other Republican proposals before it, is selling a dream that experience has shown will never come true. The nation cannot have drastic tax cuts that disproportionately benefit the wealthy and also fund basic programs and services and grow the economy.