Quotes of the day

“On Tuesday I will announce my ‘Cut, Balance and Grow’ plan to scrap the current tax code, lower and simplify tax rates, cut spending and balance the federal budget, reform entitlements, and grow jobs and economic opportunity.

“The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate. The new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents.

“This simple 20% flat tax will allow Americans to file their taxes on a postcard, saving up to $483 billion in compliance costs. By eliminating the dozens of carve-outs that make the current code so incomprehensible, we will renew incentives for entrepreneurial risk-taking and investment that creates jobs, inspires Americans to work hard and forms the foundation of a strong economy. My plan also abolishes the death tax once and for all, providing needed certainty to American family farms and small businesses…

“We should start moving toward fiscal responsibility by capping federal spending at 18% of our gross domestic product, banning earmarks and future bailouts, and passing a Balanced Budget Amendment to the Constitution. My plan freezes federal civilian hiring and salaries until the budget is balanced. And to fix the regulatory excess of the Obama administration and its predecessors, my plan puts an immediate moratorium on pending federal regulations and provides a full audit of all regulations passed since 2008 to determine their need, impact and effect on job creation.”

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“Rick Perry has just unveiled his tax-plan. It institutes a 20 percent flat tax that maintains the charitable and mortgage interest deductions. But Perry doesn’t have all that much faith in his scheme as he would allow anyone who wants to file under the current code the option to do so.

“This is an admission that for many Americans the status-quo is actually better than anything Rick Perry’s team can devise.

“Perry’s tax-plan would preserve all the confusion, waste, and market distortions in the current code, and add another layer. The politicians who manage that would get a new tax-code to fiddle with as a bonus – one that has little substance beyond massively cutting taxes for the wealthy. Perry is selling simplicity to the GOP’s base voters–that’s the most appealing thing about a flat-tax– but most of these voters would actually pay less under the current more confusing code.

“Perry claims that tax-fliers could fill out their taxes on a post-card. That’s true, but most taxpayers would have to at least calculate what their tax-bill will be under both plans. Perry’s GOP rivals should feast on him for making Americans calculate two bills for themselves.”

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“As several leading Republican presidential candidates embrace a flat tax as a core campaign position, one contender stands out in not doing so: Mitt Romney, who has a long record of criticizing such plans and famously derided Steve Forbes’s 1996 proposal as a ‘tax cut for fat cats.’

“Lately, though, his tone has been more positive. ‘I love a flat tax,’ he said in August…

“Romney aides dispute the criticism and say his objection to the Forbes plan was specific: that it would raise taxes on the middle class. Gail Gitcho, a Romney spokeswoman, said there was ‘no inconsistency’ in his position. She said he could support a flat tax that did not raise taxes.

“But when asked about the many flat-tax plans that have been floated in the last two decades, Romney aides said they could not recall any that might pass muster with Mr. Romney’s requirements. Nor would they venture the outlines of a new plan that might meet his test. They also do not dispute the notion that a flat tax could never generate the same amount of tax revenue while also maintaining the same relative burdens on the wealthy and the middle class.”

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“‘You know, I love a flat tax,’ Romney said at a town hall meeting in August, the origin of the quote used by the Times. ‘There’s a lot about a flat tax that works, but it means different things to different people, and this is the key for me — I want to make sure that we don’t … end up giving a break to certain groups of people and not to others.’…

“‘I’m not looking for a tax break for me,’ Romney continued. ‘But I want to make sure we keep taxes as low as possible for middle-income Americans who want to get rich because it is them — it is the entrepreneurial spirit of the great majority of Americans — that allows us to have the vitality, economically, that has propelled us to where we are.'”

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“Here are the pros [of Perry’s flat-tax plan], as I see them:

“1. Conservatives will love it. Key thought leaders like the Wall Street Journal editorial page, Steve Forbes, and CNBC’s Larry Kudlow are huge flat tax fans. And while conservatives are split about the Fair Tax and 9-9-9, the people who like the boldness of those plans should have no problem with a flat tax…

“4. It presents Romney with a big problem. Ripping Perry’s flat tax as regressive would alienate conservatives and make him sound even more moderate/liberal than when he attacked Perry on Social Security. And Romney himself lacks a big tax reform plan, only hinting that he would change things along the lines recommended by the Bowles-Simpson commission. Romney’s best case is that a flat tax is impractical and would never pass Congress…

“And here is the big con:

“Perry’s flat tax will be attacked as regressive and a deficit disaster. The devil will be in the details. How high will the rate be? What income levels will be exempted? Will there be any deductions or credits such as for mortgage interest, children, or charitable giving? Will the super-rich pay lower taxes? Perry better know the ins and outs of the plan a lot more thoroughly than Cain apparently knows his. For instance, critics are already pointing to static-analysis studies from the ’90s that showed flat tax plans would have been huge revenue losers if implemented. Perry will need to make the case, which Cain hasn’t, that his plan will create a lot more economic growth to make up for any distributional issues. Remember these two words: dynamic scoring.”

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