Nonetheless, it appears the Obama people acknowledge at least some effects from supply-side incentives. And perhaps they are implicitly recognizing the likelihood that higher tax rates on cap-gains and dividends will generate lower revenues and a higher budget deficit.

It also seems clear that the Obama tax plan is not a growth policy, but a social policy that uses tax fairness as a means of redistributing income. There’s a long history of failed redistributionism, and this is where the Obama plan falls apart.

Plus, the world’s changed since the 1990s. The flat-tax revolution coming out of Eastern Europe has slashed marginal rates on individuals and corporations, resulting in strong growth and big revenue gains that keep budget deficits down.

Sen. McCain’s plan to maintain the Bush tax cuts and move toward a lower corporate tax rate will leave the U.S. in a much more competitive position in the global race for capital and labor. But I still believe the best tax reform is a flat tax that would end the multiple tax on saving and investment by doing away with taxes on capital gains, dividends, and estates. Corporate tax rates also should be slashed and all forms of corporate welfare, subsidies, and loopholes should be eliminated. This would put K Street lobbyists out of business and put tremendous torque behind our future economy.

But Team Obama’s small shift toward the supply-side remains a positive development.

The McCain folks are now slamming Obama’s credibility on tax hikes and other issues. They infer that the young Illinois senator is a flip-flopper. Well, that’s true. But some flip-flops are better than others. Sen. McCain flip-flopped on the Bush tax cuts and drilling. Bravo for that. And if Sen. Obama is flip-flopping toward lower investment taxes, so much the better.