How much does Steve Forbes hate the current federal tax code?
Let us count the descriptions: "A huge dead weight." "An abomination." "A source of corruption and corrosion." "Beyond reform." "A hideous code that nobody understands." "A monstrosity."
And that was just during a Wednesday morning speech.
But Forbes, president and chief executive officer of Forbes Inc. and the owner and publisher of Forbes magazine, said a flat tax system would boost economic development and government revenues, and that Utah can have a role in perhaps ultimately having a federal flat tax.
"Bottom line, what you do here in Utah is going to have an impact ultimately on the national debate," Forbes said during the annual meeting of the Economic Development Corp. of Utah. "If you do it here and show that states can do it and do it successfully, ultimately Washington will do it."
A low flat tax — Forbes suggests a 17 percent rate with "generous" exemptions — will create wealth for Americans and prompt economic growth through "more innovation, more jobs, more expansion." But, he said, people need to understand that taxes do more than raise revenue for government.
"Taxes are also a price and a burden. The tax you pay on income is the price you pay for working. That tax you pay on profits is the price you pay for being successful. Tax on capital gains? The price you pay for taking risks that work out," he said.
"And the precept is very simple, but too often not reflected in public policy: When you lower the price of good things — like work, productivity, success and risk-taking — you get more of those good things. Raise the burden and price on those good things, you'll get less of them. If you understand that and grasp that seemingly simple concept, which too many policymakers around the country and world don't, then you understand the imperative of a flat tax."
Such a tax will cause people to do things for the right reasons rather than deciding based on tax ramifications and scrambling for deductions and write-offs, he said.
Plus, flat taxes have been proven to work in several places already, including Hong Kong, Russia, Slovakia and Ireland, he said. "Make it simple. Make it low. It works," Forbes said.
Even in the United States, tax cuts have led to wealth-building and prosperous economies in the 1960s, 1980s and since May 2003, he said. Since that latter time, the U.S. economy has grown more than $2 trillion — more than the entire Chinese economy, he said.
The current federal income tax code has "9 million words and rising ... and there's not a soul in this room or in the world that knows what's in that tax code." That includes experts, and even those at the IRS, he said. Plus, the code has been amended 20,000 times, and 3 million words have been added since it was "simplified" in 1986.
"It is beyond repair. The only thing to do is take this monster, kill it, drive a stake through its heart, bury it and hope it never rises again to terrorize the American people," Forbes said to rousing applause.
Adopting a flat tax in Utah could lead other states to fall in line in "a virtuous circle" and apply pressure for a federal flat tax.
"Quality of life is becoming very important. All you have to do is provide the right kind of environment where people can say, if they move here, they're not going to be taking a huge financial hit, as they would if they, say, move to a state — I'll be blunt — such as California. You will take a hit there," Forbes said.
The former presidential primary candidate suggests giving people a choice of sticking with the old system or trying a flat tax as a way of proving the benefits of a new tax structure that he said would eliminate tax "winners" and "losers."
And he tried to dispel a concern of many Utahns that charitable giving would suffer under a flat tax.
"The bottom line is, when people have more, they give more. ... Tax rates have little to do with what people give. If they have it, they give it. ... The flat tax will mean more giving, not less," Forbes said.
E-mail: bwallace@desnews.com