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Thompson on Tax Cuts

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.

But he did cite one change in spending that he would use to make up for any revenue losses--his previously announced Social Security plan, which would slow the growth in Social Security benefits and create private accounts.

--Jeffrey H. Birnbaum

Posted at 1:06 PM ET on Nov 25, 2007
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and just how does ADDING to the tax code simplify it? tax code: "...would allow filers to remain under the current, complex tax code or use the flat tax rates..."

Typical politician - thinks by adding something it simplifies it. Now anyone who wants to use the "optional" flat tax would first calculate taxes the old way, PLUS the new way and take whichever yields lower taxes.

So how many pages will this ADD to the tax code, forms and instructions ???

Posted by: info | November 26, 2007 8:45 AM

If you think it's a failed ponzi scheme now, just wait till you stop contributions to it.

We baby boomers will have to go find that gold mountain you have stashed away for the "sound money system" and count out our pieces of eight.

With maybe a dubloon or two thrown in. Whatever's in your stash.

rd

Posted by: ralphdaugherty | November 26, 2007 12:20 AM

If I could just cut to the chase - I find it very hard to believe that Fred's plan, in toto, would really reduce the size of government, which is the direction we must go.

It's great to talk about simplification but in the end, most tax reforms are openly advertised as "revenue neutral" which means that after all is said and done, government will have the same amount of money to spend and waste as it did before.

The real truth that no candidate wants to face is that certain things that government does can't be "reformed" but must be eliminated, like Social Security. Ron Paul realizes that it must be phased out and young people must be able to opt out of the failing ponzi scheme.

Also, Ron Paul, unlike Fred, realizes that taxation is just one way that government steals away our wealth and standard of living. Inflation is another, which is why Ron Paul wants to go back to the sound money system in the Constitution - a system which served us just fine for over a century of steady economic growth.

Also, realize that supposed conservative Fred is copying Bill Clinton when he advocates slowing the rate of increase of Social Security payouts. That ensures that the poor will get poorer by first off perpetuating a failed program, and second by making sure that inflation ravages the benefits of those who are dependent on the system.

This is why Ron Paul's positions on the Fed, Sound money, and Social Security are very important to the future of this country. I do not think our children deserve to be wage slaves of a gluttonous government. Not one candidate other than Ron Paul has had the courage to address the real problems in this country, because to do so would call into question the success of the very state itself.

I'm sorry, but people like Fred Thompson have already been the problem in this country for so long that it literally beggars belief that they could be part of the solution.

Ron Paul is the guy we need.

Posted by: TomdeSabla | November 25, 2007 11:47 PM

Very well said, fortheclueless. I'm a Hillary Clinton supporter and just slumming in here, but I do believe that we should have and people would support a flat one rate tax with a deductible of the minimun wage at 40x52 hours.

In other words, taxes would be paid on anything over minimum wage at one rate, no deductions, period. Income is income, so dividends are income and expenses for business, for example. No special treatment of income.

But here's the kicker. The rate is based on income of the prior year, not rosy political pie in the sky rosy scenario projections.

And every dollar passed in appropriations determines what that rate is. It is what is spent.

Everything going better than last year and we bring in more than we authorized? Wonderful, because we have plenty of funds that need beefed up, if not pay off some debt for the inevitable years when we'll bring in less than last year and need to borrow.

Now I know politicians can't help themselves from ingratiating themselves with interests with "special" laws for their favorite contributors, but really, no "special" laws. Just slap their hands and tell them to get their paws out of the cookie jar.

It'll be a rude attitude adjustment, but real people in real kitchens all across America know what it means to pay the bills.

It's time politicians did too.

rd

Posted by: ralphdaugherty | November 25, 2007 10:51 PM

grab your ankles middle class and blue collar america..jowls thompson wants to give it all to the rich..learn to enjoy the hearty flavor of canned dog or cat food..it will be all you can afford!

Posted by: w04equals666 | November 25, 2007 10:50 PM

Wow at first this sounds like a great deal. You can opt in or out and it appears the rate is 25% for married couples making 100k. It sounds like a great deal if you didn't understand just how good you have it now!

In case you don't quite follow, here are the current tax schedules:
http://www.irs.gov/formspubs/article/0,,id=150856,00.html

Currently people making up to 75k pay 4500 plus 25% on earnings over 30k. So if you flatten this out on this person making 75k is actually paying a total of 8750 in taxes for an effective tax rate of 11%. If you stupidly opted into this flat tax you would actually increase your taxible burden by 14%. Now while it sounds real good to just double the standard deduction...that doesn't do anything but screw the home owner who is likely writing off way more than that in itemized deductions. But hey, compassionate conservatists care.

Lets take a look at the family making 100k. Your taxible burden is currently 8400 plus 25% on any earnings over 61300 for an effective tax rate of about 18%. If you stupidly supported this you'd increase your taxible burden by 7%. Just like the standard deduction above, while this sounds attractive have a look at what happens to your deductions since you can't itemize. But hey, compassionate conservatists care about you...and so they basically bent both parties over by splitting the difference.

Now if you are a guy who owns you own business, you know, the guy who these idiots supposedly care about, at first glace your company is reducing its tax base by 8%. But did you notice what happened to your personal income tax as I've outlined above? Its shifting the burden and thats about it.

Now, lets have a look at the guy who really makes out on this deal. Lets have a look at just who these compassionate conservatists really do care about. How about what happens under the Thompson plan when somebody making a few hundred grand gets to take advantage of their flat tax. That guy is taxed 42k plus 33% on anything over 123700 for an effective tax rate of about 33%. Under the Thompson proposal this guy stands to decrease his taxable rate by as much as 6%. That means 18k he doesn't have to pay that you will. Not to mention he won't have to pay alternative minimum tax on his stock options (where he really makes his money), and won't have to pay taxes on his estate, nor will his children.

If you, yourself, don't make at least 180k, you won't see a benefit at all as a result of this plan. You'll be paying more under this plan. I think its about 9% of the households in the US that make 100k a year or more? So that means the real benefit here is 2-3% of the population gets a break. I ask, when is the last time this government has ever done anything of this magnitude to benefit 2% of the population? There are more people with cancer, more people with AIDS, more people in mortgage trouble, than this 2% who makes out like a thief in the night. Where is the government interest in fixing the problems that burden 10, 20, 30% of the population? Wouldn't that be a more effective thing for our leaders to focus on? The Republicans just don't get it. You cannot sustain growth with cuts. At some point any organization needs to pay its bill...and thanks to the wonderful leadership we've had over the past 7 years that is going to be one helluva bill.

Posted by: fortheclueless | November 25, 2007 9:38 PM

You can call this the jack up the tax rates on the well-to-do liberal elites (lawyers, doctors, professors, writers etc.) who have fairly high incomes ($200,000-less than $1 million a year)but little other income. It is too bad, since if you adopt a two-rate income tax system stripped of deductions and credits, it would not so bad--but only if capital gains, estate inheritances, dividends, etc were subject to the two tiered tax system. But nope, this scheme shifts the tax burden from the true rich to the "doing wells". Part of the grand scheme to only tax income in this country and allow trilions to be passed on to the fortunate few tax free. Like Bush, Thompson truly has no decency.

Posted by: merganser | November 25, 2007 7:15 PM

Mike Huckabee on Arkansas gas tax. This is a youtube video put out by the Club for Growth:

http://www.youtube.com/watch?v=zO-flytX2HQ&eurl=http://www.blogsforfredthompson.com/club-growth-slams-mike-huckabee-video

Posted by: bjwalters80 | November 25, 2007 6:27 PM

The Mitt Romney Report, a report on Mitt Romney's record before he decided to run for President:

http://massresistance.org/romney/

Posted by: bjwalters80 | November 25, 2007 6:25 PM

Posted by: bjwalters80 | November 25, 2007 6:22 PM

One online research site measures vast amounts of Internet traffic, and then makes estimates of how many UNIQUE AMERICAN COMPUTERS visit a given website. Let's look at how some of the candidate websites stack up:

Fred08.com 287,000

HillaryClinton.com 209,000

BarackObama.com 192,000

RonPaul2008.com 155,000

JohnEdwards.com 115,000

MittRomney.com 103,000

JohnMcCain.com 73,000

JoinRudy2008.com 68,000

Posted by: bjwalters80 | November 25, 2007 6:20 PM

It is really a shame that children under ten can't weigh in on these ridiculous proposals that will result in a system where a few kids in private school in the suburbs will start life with inheritances in the tens of millions and they will have minimal social security protections and lessened governmental services. Tax breaks will go to the richest of the rich and will be frozen in place.

Posted by: Cybersophist | November 25, 2007 5:24 PM

Anyone interested in some telling Thompson video from his first week on the trail in SC and an accompanying column should try:
http://goupstate.us/index.php/lanefiller/2007/11/05/fred_thompson_for_president_of_what_the_

Posted by: lanefiller | November 25, 2007 5:24 PM

Hitwise came out with new information on website traffic last week, and Thompson has been consistently dying. America's interest in Fred has plummeted ever since he entered the race. You can see some recent polling information and statistics that bear this out at:

www.mike-huckabee.blogspot.com

Posted by: johnpmorris | November 25, 2007 4:31 PM

What name shall we give the 8 trillion in debt that Republicans have run up since 1980 with the same tired logic?

That's 8 trillion (plus the trillion we had in 1980 run up since the founding of the country) that Republicans are bequeathing to our heirs to pay.

Shall we call it the Republican tax?

the Descendants Tax?

the We Got Ours, You Pay For It Tax?

the Borrow From Commies Act?

the Our Economy Is Broke Because We're So Far In Debt, So Let's Lower Taxes And Borrow Some More Tax?

or how about It's Not A Tax If You Can Borrow More Tax?

but most appropriately, how about the Republicans Pyramid Scheme Tax?

Because when the commies get tired of manipulating currency with all the money we owe them, the pyramid scheme is over.

Just don't tell the kids.

rd

Posted by: ralphdaugherty | November 25, 2007 3:22 PM

Thompson's Social Security plan would reduce benefits to middle income retirees by about 30% by 2050, according to the Urban Institute. In addition, his advocacy for extending Bush's tax cuts--while remaining philosophically faithful to the Republican Party's economic elite--would do nothing (as usual) for roughly 68% of American households. Indeed, it would actually damage some 40% of households since Republican tax cuts always accompany social service cuts (under the guise of cutting "waste, fraud and abuse").
The false argument that such tax policy "grows the economy" when it simply increases the federal debt and, as a consequence, increases borrowing costs for Americans, must be cast out once and for all. It's disgraceful that half the electorate allows themselves to be cynically manipulated in this way by a political class who speaks long, loud and hard on gay marriage, abortion and religion but swiftly and relentlessly enacts only tax cuts once in office.
opinionatus.blogspot.com

Posted by: Timothy3 | November 25, 2007 2:47 PM

Fred Thompson called his trip down an aisle of rifles, shotguns and pistols at a gun show Saturday "a day in paradise," and criticized his leading Republican opponents for past positions on gun control and abortion.

How would you characterize Fred Thompson so far?

http://www.youpolls.com/details.asp?pid=1079

.

Posted by: PollM | November 25, 2007 2:19 PM

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