Three days after local elections this week, freshly re-elected county Board of Education member Justin Williams opened a speech with, “On Tuesday, I voted for myself and at the same time, I voted against the tax increase proposals. On Wednesday, I realized that I just signed up for four years of budget-cutting battles.”
Mr. Williams’ astute assessment clarifies why it is so rare that elected officials wax enthusiastic about tax cuts. Indulging in new programs is a lot more gratifying and a whole lot less painful than austerity.
Because of this reality, the Paperwork Reduction Act of 1980 has been about as successful as Michel Moore’s diet when it comes to annual tax return filings. But a new trend has emerged within the Republican presidential candidate debates that gives me hope for refurbishing the onerous US tax code.
No matter who the nominee becomes, if we can elect a Republican replacement for Barack Obama, America will have a rare opportunity to clean up one of its biggest messes. All GOP candidates seem to favor a balanced budget amendment and repealing Obamacare. Here are some highlights from what the candidates are saying about their tax plans in alphabetical order:
Michelle Bachmann
- Replace the current tax code with a simplified version, reducing the number of tax brackets
- Ensure that everyone in the country participates in paying taxes, regardless of income
- Eliminate the Alternative Minimum Tax
- Eliminate the Death Tax
- Simplify the corporate tax code
Herman Cain
In the short term, replace the current tax code with:
- 9% Business Flat Tax; gross income less all purchases from other U.S. located businesses, all capital investment, and net exports, plus a
- 9% Individual Flat Tax; gross income less charitable deductions, and a
- 9% National Sales Tax.
- Eliminate capital gains
- End nearly all deductions
- Eliminate the death tax
- Immediately expense business investments
- Institute “Empowerment Zones” exceptions for inner cities
After realizing economic recovery, probably during a second term, Cain would campaign to the American people to transition to the Fair Tax (www.fairtax.org), which would eliminate income taxes in favor of a national sales tax system, coupled with minimal sustenance funding for every legal resident to eliminate the IRS and welfare programs.
Newt Gingrich
- Offer optional 15% flat tax on individual incomes
- Eliminate capital gains
- Reduce corporate income tax to 12.5%
- Preserve deductions for charitable giving and home ownership
- Create new personal deduction of $12,000, eliminating taxing those below poverty line
- Allow 100% expensing of new equipment for businesses
Ron Paul
“I want to abolish the income tax, but I don’t want to replace it with anything. About 45 percent of all federal revenue comes from the personal income tax. That means that about 55 percent — over half of all revenue — comes from other sources, like excise taxes, fees, and corporate taxes. We could eliminate the income tax, replace it with nothing, and still fund the same level of big government we had in the late 1990s. We don’t need to ‘replace’ the income tax at all. I see a consumption tax as being a little better than the personal income tax, and I would vote for the Fair-Tax if it came up in the House of Representatives, but it is not my goal. We can do better.”
Rick Perry
- Offer optional, alternative flat tax 20 percent system
- Maintain mortgage deductions for families earning less than $500,000
- Create new personal deduction of $12,000, eliminating taxing those below poverty line
Mitt Romney
Romney’s tax plan is the most elusive, perhaps because it contains the most words. The only definitive element seems to be, “Immediately cut the top corporate income-tax rate to 25% from 35%.” After that, sweeping statements like, “lower individual tax rates” and “Pursue a Fairer, Flatter, Simpler Tax Structure" don’t give us much to go on. Two taxes that are popular to hate are included in the Romney reform, but with some enormous exceptions:
- Eliminate the capital gains tax—but only for those who earn less than $200,000 a year
- Eliminate the Death Tax—but only for estates in excess of $5 million
Projecting how each of their plans would effect revenue is impossible. Some theories are even counter-intuitive. Remember that Ronald Reagan increased tax revenues when he lowered tax rates.
A Republican president would have the finest economic minds available; folks like Arthur Laffer who have been sidelined for years, itching to be called on once again. We actually may be on the brink of a magnificent tax revolution and I hope that we are.
P.S. I don’t believe for a minute that Herman Cain is the father of Justin Bieber’s baby.