Fred Thompson has a tax plan:
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.
Here's Ramesh, in response:
I see two possible problems with this plan. The first is that it would have to be coupled with a plan to restrain spending, or even to cut it, to avoid a large expansion of the deficit. The second is that, as presented, it shifts the tax burden onto parents. Indeed, it shifts it from corporations onto parents. If I were Mike Huckabee or Mitt Romney, I might have something to say about that.
Good points both, but Ol' Fred doesn't buy into that whole "expansion of the deficit" business:
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.
Obviously, affluent business-class types are deserting the GOP primarily because of its stance on social issues. But I can't help thinking that this sort of transparently bogus supply-side dogmatism - which fits into a larger narrative, sometimes fair and sometimes not, of the Republicans as the know-nothing party - has more than a little to do with it as well. Business-class voters want lower corporate tax rates, sure, but they also want a party that acts like it knows how to manage the economy more generally, particularly as the dollar weakens and the country edges toward recession. And sound economic management would seem to require, at the very least, demonstrating an understanding of basic principles like how tax cuts affect revenue.
If I'm right, this raises the possibility that the party's commitment to supply-side orthodoxy is hurting the GOP coming and going: To savvy business-class voters, the Thompson-style magical thinking it requires makes Republicans look ignorant and untrustworthy; to middle-income families, meanwhile, the emphasis on estate taxes, corporate tax rates and upper-bracket cuts makes the party look out-of-touch with kitchen-table concerns.
But hey - at least it keeps the Club for Growth from bolting to the Democrats.
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