Fred Thompson-N-Mo

From the Missouri House of Representatives’ Former Speaker Pro Tem

  • About Carl Bearden

    Carl is the former Speaker Pro Tem of the Missouri House of Representatives and one of the earliest supporters of Fred Thompson for President. Initiating a petition for his fellow caucus members to sign, the Speaker Pro Tem garnered the support of over half of the Republican House members (63%, to be exact). More information about Carl can be found at his wikipedia page. Simply search "Carl Bearden".
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Thompson Proposal Rooted in Flat Tax

Posted by tommyd4 on November 26, 2007

Hat tip to mornincoffee

Fred Thompson’s tax plan, released this morning, seperated his position from some of the other contenders. Thompson is one of the few GOP hopefuls that offers the flat tax. The plan is a qualified endorsement of the Taxpayers Choice Act, or the “flat tax.” With this plan, which is outlined here, in pdf, Thompson has taken a pretty bold step, as he did with his social security plan.

From the AP:

Republican presidential hopeful Fred Thompson proposed an income tax plan Sunday that would allow Americans to choose a simplified system with only two rates: 10 percent and 25 percent.
Thompson’s proposal, announced on “Fox News Sunday,” would allow filers to remain under the current, complex tax code or use the flat tax rates.
Asked whether the plan would cut too deeply into federal revenues, the former Tennessee senator and actor said experts “always overestimate the losses to the government” when taxes are cut.

“We’ve known for years any time we have lowered taxes and any time we’ve lowered tax rates, we’ve seen growth in the economy,” Thompson said.
Thompson added that money would be saved by his Social Security reform plan. He proposed that workers younger than 58 receive smaller monthly Social Security checks than they are now promised. Individuals could contribute 2 percent of their paycheck to a personal retirement account, an amount that would be matched by the Social Security trust fund.
The retirement plan “faces up to the fact that Social Security is going bankrupt and we’re going to have to do something about it,” he said.

The fact is that he has followed up on his promise of overhauling the current tax code. The plan has been supported by the Heritage Foundation, Steve Forbes, the Club for Growth, the CATO Institute, Chief Justice John Roberts, Sam Brownback, and Dick Armey, to name a few.

Among the other GOP contenders, John McCain has been supportive of it. Mike Huckabee favored the tax, but has now become an advocate of the FAIR Tax, which is not the same thing (see below). Tancredo and Ron Paul support it (he supports no tax). Rudy Giuliani’s position on the issue is not that clear, but I was late to the whole debate on his position. He seems to favor a more moderate form of revision, but does not endorse the tax. Romney also favors a simplification, but has criticized the flat tax as recently as April, and has said that he is opposed to it. Sam Brownback proposed a very similar plan to Thompson’s before he departed from the race.

However, according to CNBC, no major Republican candidate was, as of 10/9:

currently running on a flat income tax,though Mike Huckabee is pushing a flat consumption (sales) tax to replace the income tax altogether

Well, I guess we have one now.

The Flat Tax was originally authored by Robert Hall and Alvin Rabushka in this book, published and assisted by the Hoover Institute.

In arguing for the proposal, Race42008 contributor DeRoy Murdocke, in April of this year, wrote that:

Americans deserve a voluntary flat tax. Those who love this gargantuan Tax Code, its multiple rates, and baroque intricacies, should be free to keep filing form after form, if that makes them happy. Meanwhile, those who prefer a flat rate with few if any deductions should be free to choose a postcard that would ask one’s name, address, and income, and a simple calculation for, say, 17 percent thereof.

Politically, a voluntary flat tax would let issue-starved Republicans and conservatives avoid a wrestling match with Democrats and liberals over keeping or scrapping the charitable or home-mortgage deductions. Instead, the Right can argue for giving Americans the freedom to select between two available systems. The sales slogan is simple: “It’s your tax. It’s your choice.” Let the Left argue against granting Americans that option. The Right can win that fight.

Next year, Utahans will choose between either a traditional, six-bracket tax (from 2.3 to 6.98 percent) with exemptions and write-offs, or a simple 5.35 percent flat tax without deductions. The Beehive State will join flat-taxing Estonia, Slovakia, and Ukraine, all of which have seen their economies energized by a single tax rate on income. Even Russia has jettisoned its three-bracket system and its 30 percent top rate on incomes above $5,000. Instead, it has embraced a 13 percent flat-rate tax.

“Before the flat tax, most salaries were paid as cash under the table. That almost has disappeared,” said Yuri Mamchur, director of the Real Russia Project at Seattle’s Discovery Institute. “It’s easier to pay 13 percent than to avoid it.” The former Muscovite added: “The flat tax contributed to economic growth, but more importantly, it sped Russia’s return to the rule of law.”

Hoover Institution economist Alvin Rabushka concurs. “The low flat rate contributed to the decline in capital flight [and] improved taxpayer compliance [in Russia],” he said. In fact, tax evasion in Russia has gone the way of the Gulag. Since the Kremlin adopted the flat tax on January 1, 2001, revenues have swelled 128 percent after inflation.

If the flat tax is good enough for the former Evil Empire, it’s good enough for America’s embattled taxpayers.

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