Ample supply

I join Ross in believing that the Republicans should stop spouting nonsense rhetoric about their plans to raise tax revenue by cutting tax rates. However, it's not clear to me that this is what Fred Thompson is doing here:

Former senator Fred Thompson (R-Tenn.) today proposed a series of tax cuts as a way to stimulate economic growth.

Speaking on Fox News Sunday, the presidential candidate recommended extending President Bush's tax cuts, due to expire in 2010, eliminating the estate tax, repealing the alternative minimum tax and lowering the corporate tax rate to no more than 27 percent from the current 35 percent.

Thompson also said that he would adopt the approach of the conservative Republican Study Committee in the House of Representatives that would offer, as an alternative to the current income tax, a two-rate income tax system stripped of deductions and credits.

Estimates devised earlier this year by the nonpartisan staff of the Congressional Joint Committee on Taxation indicate that major parts of Thompson's plan would lose at least $2.5 trillion over ten years, nearly as much as the entire federal government is expected to spend this fiscal year.

In the interview, Thompson said such official estimates are often wrong and that his tax cuts would stimulate "growth in the economy" and bring in more revenue than expected.

There are three kinds of tax cuts rolled together: personal income tax cuts, corporate income tax cuts, and tax simplification (aka base-broadening). The latter two could plausibly be revenue raising. It's hard to tell which estimate the WaPo is referring to, "major parts" being endearingly vague, but I have my money on extending the Bush tax cuts. Tax simplification and cutting the corporate income tax would spur growth, and tax simplification might, by itself, bring in a significant amount of money, so I'm not sure it's correct to characterize Fred Thompson as dishing out the supply side Kool-Aid.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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