Fred Thompson opts to avoid tax reform
Posted by BrianInstead of actual tax reform Fred Thompson is proposing to add to the confusion of the income tax with a plan that will likely result in many paying more. You can read the gory details at the previous link or here on the so-called Club for Growth’s website. Thompson’s plan has the usual items that every GOP candidate seems to trot out, but rarely follow through on, like eliminating the death tax and lowering corporate taxes.
The core of his “reform” would be to enact the optional flat tax. Well, actually Thompson’s plan calls for optional flat taxes, which means that it is not a flat tax - just an alternate tax schedule that would, at least initially, only have two levels.
[Thompson's plan would give taxpayers] the choice of filing under the current system or a flat tax rate of 10 percent for joint filers with an income of up to $100,000 — $50,000 for single taxpayers; and 25 percent on income above these amounts.
Sound’s great, right? Think again. Thompson’s plan is like an extension of the standard deduction philosophy. One of the problems with our unbelievably complicated tax code is that many taxpayers choose to take the standard deduction rather than go through the laborious calculations required to itemize. Consequently many people overpay the federal government. If Thompson had his way more people would choose to go the new easy route and pay the optional (not) flat taxes. Regrettably, many of these individuals will also overpay. The rest of us who seek to take every action possible to legally minimize our tax bill will still have to do the itemization calculations - and then compare that to the standard deduction - and then compare those two to the optional (not) flat taxes amount. Three damn calculations in order to determine our minimum tax obligations! Thompson’s plan offers absolutely no relief from the crushing $265 billion in annual tax compliance costs.
To be fair, Thompson’s plan offers some improvements over the current tax system, but those improvements are fairly modest to say the least. He had the chance to embrace real tax reform by endorsing the FairTax, which he flirted with early in his unimpressive campaign, but instead he has decided to shuffle things around like a street hustler dealing three card monte.
Let’s compare some of the particulars of Thompson’s plan with the FairTax:
Complexity: Thompson’s plan retains and adds to the current tax code that no one can understand. The FairTax makes paying exactly what you legally owe a reflexive operation that requires no thought and eliminates inadvertent overpayment.
Corporate taxes: Thompson’s plan finally makes American companies competitive with Europe, but leaves us far behind dynamic, growing economies like Ireland. The FairTax eliminates corporate taxes, making American based companies the most competitive in the world and luring many companies to our shores - and hiring our citizens.
Fairness: Thompson’s plan will continue to prey on those that are too busy to spend hours calculating taxes or not educated enough to navigate through the maze of forms by causing them to overpay. With the FairTax overpayment is history regardless of your lot in life.
Social engineering: Thompson leaves the federal social engineering tool of choice intact. The FairTax makes it impossible for the government to manipulate Americans.
Lobbying reform: Thompson’s plan keeps the folks on K Street fat and happy. The FairTax sends them packing. The government will no longer pick winners and losers at the behest of high paid schmoozers with the FairTax.
I could go on and on…
This is just one more disappointment in the candidacy of Fred Thompson.
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November 26th, 2007 at 10:49 am
Disclosure - I have a Fred08 sticker on my truck. I also have a ‘Fair Tax’ t-shirt.
What legislation is required to implement Thompson’s simplified tax plan? - regular Congressional legislation…
What legislation is required to implement the ‘Fair Tax’? - Repeal the ‘16th Amendment’, Pass the ‘Fair Tax’ Constitutional Amendment…
Which one is easier and faster to accomplish?
Maybe Fred is taking the ‘lazy’ route - trying to fix what he can… I see this is a ’stopgap’ measure to take while the ‘Fair Tax’ process continues… Fred stated he would sign the ‘Fair Tax’.
November 26th, 2007 at 11:15 am
All that is required to pass the FairTax is congressional legislation. When the FairTax is passed the IRS will cease to exist other than to audit previous year’s returns. The 16th amendment authorizes the government to collect income taxes, but does not require it to do so. Certainly the repeal of that amendment will begin with great zeal after the FairTax is passed, but it is not a prerequisite.
What support is there for the ridiculously named “optional flat tax” on the grassroots or in Congress? Virtually none. The FairTax is the most broadly supported tax reform in Congress and on the ground. By virtue of that reality I would suggest that it would be faster and easier to pass.
Fred’s embrace of the FairTax has been fleeting. He was caught on a video clip saying he would sign it, but his campaign tried to distance him from the bill. I’ve heard from at least one person close to his campaign that Thompson has problems with the FairTax as written.
I’m telling you, Thompson’s choice to offer up lackluster, middling tax reform is not a good sign for his campaign or the GOP in general. The party is lagging the Democrats badly on nearly every front and they need to be bold to avoid another sobering election day.
November 26th, 2007 at 11:59 am
The tax system is not my first issue; it’s in the top five, but not a deal breaker for me… I do think that Fair Tax would be a winner for Fred, but looks like he’s going the way of Steve Forbes…
Brian, my bad, I should have stayed for the entire session
instead of relying on FairTax.org FAQ (I understand that there are separate bills):
[QUOTE]Could we end up with both the FairTax and an income tax?
No current supporter of the FairTax would support the FairTax unless the entire income tax is repealed. Moreover, concurrent with the repeal of the income tax, a constitutional amendment repealing the 16th Amendment and prohibiting an income tax will be pushed through Congress for ratification by the states (filed as HJR 16 in the 110th Congress).[/QUOTE]
[QUOTE]Is there any provision in the FairTax bill to prevent both an income tax and a sales tax?
The short answer is that there is no provision in the FairTax bill (HR 25) that would prevent having a national sales tax and the income tax. However, the FairTax legislation does three things that effectively dismantle the income tax: (1) it abolishes the IRS, (2) it repeals all statutory language having to do with taxing income and payroll (i.e., the Internal Revenue Code), and (3) it eliminates the filing of annual income tax returns to the federal government for over 140 million Americans. The 16th Amendment does not “require” an income tax, it only “allows” one, and the FairTax will have broken that egg in a million pieces. It would be extremely difficult to put that egg “back together again.”
…
Furthermore, the sponsors of the FairTax are totally dedicated to the permanent repeal of the income tax. No current supporter of the FairTax would support the FairTax unless the entire income tax is repealed. There is a separate bill, HJR 16, which repeals the 16th Amendment to the Constitution but it must go through a different adoption process than HR 25. HJR 16 has to be passed by a two-thirds vote of members of both the House and the Senate and be approved (or ratified) by three-fourths of state legislatures (38).[/QUOTE]
November 28th, 2007 at 3:47 pm
I like the fair tax too, and it will be a reality too, one day, because of people like you and Boortz.
From what I’ve heard and read, Fred is amenable to it, it’s just not in his plan this go-around.
Disclaimer: I’m voting for Fred Thompson, because he’s the only consistant Conservative.