Fred Thompson proposes a drastically different (and much simpler) federal tax structure that offers major tax relief:
- Permanently Extend the 2001 and 2003 Tax Cuts
- Permanently Repeal the Death Tax
- Repeal the Alternative Minimum Tax
- Reduce the Corporate Tax Rate
- Permanently Extend Small Business Expensing
- Update and Simplify Depreciation Schedules
- Expand Taxpayer Choice
The reaction? A round of applause from The Wall Street Journal:
Fred Thompson’s Presidential campaign has been struggling, in part because of a sense that he lacks passion and an agenda. But 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 return with two tax rates of 10% and 25%.
[T]he 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.
That criticism from tax-loving liberals sounds familiar to me. Where have I heard that before? Something about “the rich” benefiting too much …
It’s entertaining to have a semi-liberal co-blogger. There are so many opportunities to educate him.