Good editorial from the Wall Street Journal on Fred Thompson’s tax reform ideas:
…late last week he unveiled a tax reform that is more ambitious than anything we’ve seen so far from the rest of the GOP field.
Mr. Thompson wants to abolish the death tax and the Alternative Minimum Tax and cut the corporate income tax rate to 27% from 35%. But his really big idea is a voluntary flat tax that would give every American the option of ditching the current code in favor of filing a simple tax retur6n with two tax rates of 10% and 25%.
Mr. Thompson is getting aboard what has become a global bandwagon, with more than 20 nations having adopted some form of flat tax. Most–especially in Eastern Europe–have seen their economies grow and revenues increase as they’ve adopted low tax rates of between 13% and 25% with few exemptions.
The main political obstacle to such a reform in the U.S. has come from liberals, who favor punitive taxes for “class” reasons, and K Street corporate lobbyists who want to retain their tax-loophole empires. The housing and insurance industries, states and localities, charities, bond traders and tax preparers are all foes of low tax rates.
That’s why the idea of a voluntary flat tax–introduced on these pages a dozen years ago–makes political sense. The Thompson plan would allow taxpayers to keep their mortgage and charitable deductions if they prefer, by adhering to the current tax code and rates. But it would also allow the option to abandon those credits and deductions except for a single allowance based on family size ($39,000 for a family of four). Most taxpayers would pay a 10% rate on income above that allowance, with a 25% rate kicking in at $100,000 for a couple. There would only be five lines on the tax form and most taxpayers could fill it out in minutes.
Liberals are already objecting that the plan is not “paid for,” by which they mean it doesn’t raise taxes the way they hope the next President will. But Mr. Thompson is right in refusing to play by the “static revenue” scoring game that demands that one dollar in estimated tax cuts be offset by one dollar in estimated tax increases somewhere else. “The experts always overrate the revenue losses from tax cuts,” Mr. Thompson says, and history supports him going back to the Mellon reductions of the 1920s, the Kennedy tax cuts of the 1960s, the Gipper’s in the 1980s, and this decade’s success with President Bush’s reductions.
Excellent proposal by Fred to fix a tax system that is screwed up beyond belief.
The editorial also points out that Rudy and Mitt have both failed to endorse some kind of flat tax, seeing it as too politically risky.
Just one more reason why I’m behind Fred. A politician needs to take risks. They need to put their ideas out there instead of hemming and hawing like a Clinton waiting for the polls to come out.
I just love Fred’s style of conservatism. A conservatism that is older then Mitt’s, much more conservative then Rudy’s, and is fiscal as well as social. He doesn’t have the baggage of most of the Republican candidates and is committed to federalism.
On top of all that he has begun to address the major issues in a series of position papers, something the other candidates have not done.
While I could support Mitt, Rudy & most (you know which one I could not) of the rest of the candidates if they were to get the nomination I feel Fred is really the best of the field right now.
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