Blogs For McCain

I have always believed tax simplification should be a national priority. Economists will tell you that our current federal tax code is inefficient, wasteful, and impedes economic growth. But with congressional Republicans making nice with K Street lobbyists as a priority under the direction of former House Majority Leader Tom DeLay in order to raise campaign funds and provide lucrative future careers for ex-congressional members and their staffs, the incentive to scrap a federal tax code where statutory complexity creates the need for lobbyists was not in the interests of enough Republican leaders in Congress to warrant serious legislative consideration.

The recent endorsement of Mayor Rudy Giuliani for president by Steve Forbes, and the Mayor’s subsequent endorsement of tax simplification if not the flat tax itself that Mr. Forbes has fought so valiantly for in the court of public opinion, should remind us of the importance of this issue. And perhaps not coincidentally, it is also our great and good fortune as students and fans of public policy that the Hoover Institution has announced that the seminal work by economics professors Robert Hall and Alvin Rabushka that originally erected the intellectual pillars for tax simplification, “The Flat Tax,” is about to be republished in a revised edition next week.

In studying this issue, I have concluded that a consumption (sales) tax is not politically feasible due to the sticker shock it would create among American consumers, though having a ready-made, retail store collection mechanism for our foundational tax system is attractive. Similary, a value added tax, assessed at the various stages of production, is reportedly too easy to raise by legislators and has the ultimate effect of a consumption tax because it is passed on in the form of higher prices until it reaches the ultimate purchaser of products. So the answer to the question of how to create tax simplification may well be the flat tax, though I am open to debating any and all forms of federal income tax simplification.

The question now becomes which Republican presidential candidates in 2008 will make federal income tax simplification a priority? Here is what I have found. Let’s see how these positions are debated and adjusted as the primary campaign proceeds.

Mayor Giuliani now supports tax simplification if not a flat tax, though in all fairness the Mayor called the Forbes push for a flat tax in 1996 a “mistake” and “disaster.” Speaker Gingrich seems to support tax reform that is more growth oriented, though his call for targeted tax deductions does not sound like tax simplification. Senator McCain supports a flat tax. At least in 1996, Governor Romney was against a flat tax, purchasing a series of newspaper ads attacking the idea by then presidential candidate Forbes, though currently the Governor has come out for tax simplification. Senator Brownback supports a flat tax. I cannot discern where former Senator Fred Thompson is currently on tax simplification, though previously he was a member of the Flat Tax Caucus as a Senator and spoke favorably of tax simplification during his tenure on Capitol Hill. Governor Huckabee supports a flat tax. Congressman Hunter supports tax simplification in general, though not necessarily a specific flat or consumption tax; the same goes for Governor Gilmore. Governor Thompson’s position on tax simplification is unclear, though he has a record of cutting taxes in Wisconsin. Congressman Paul favors tax cuts, though his position on tax simplification is unclear. Congressman Tancredo supports a flat tax.