FLAT TAX FRED
November 28, 2007
Fred Thompson's recently unveiled tax reform plan is more ambitious than anything we've seen so far from the rest of the GOP field, says the Wall Street Journal.
Thompson wants to abolish the death tax and the Alternative Minimum Tax and cut the corporate income tax rate to 27 percent from 35 percent. But his really big idea is a voluntary flat tax:
- 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 percent rate on income above that allowance, with a 25 percent 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, says the Journal. But 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," Thompson says. And history supports that claim, going back to the Mellon reductions of the 1920s, the Kennedy tax cuts of the 1960s, Reagan's in the 1980s and this decade's success with President Bush's reductions, says the Journal.
Source: Editorial, "Flat Tax Fred," Wall Street Journal, November 28, 2007.
Browse more articles on Tax and Spending Issues