GOP Rivals Focus On Flat Taxes, Smaller Government

WASHINGTON -- On jobs and taxes, the top Republican presidential rivals are locked in a fierce game of one-upmanship. They're all trying to outdo each other in offering the boldest economic plan for the campaign to unseat President Barack Obama next November.

Despite some notable differences in the blueprints, they all are built around the central theme that Obama's stimulus programs haven't worked and his job creation record is dismal. Example No. 1: Unemployment is holding at a painfully high 9.1 percent.

"We knew ultimately that the 2012 election was going to be a big referendum on the president," said Douglas Holtz-Eakin, former director of the Congressional Budget Office who was the chief economic adviser to Arizona Sen. John McCain's 2008 presidential campaign. "But Republicans also have to say what they would do. It's not enough to say we don't like what's going on."

Texas Gov. Rick Perry teased rival Herman Cain - "I'll bump plans with you, brother" - when both rolled out ambitious proposals for a single-rate flat tax. That's a concept hailed by numerous Republicans and some Democrats for its simplicity, yet it never has managed to attract much congressional support. Former Massachusetts Gov. Mitt Romney is the lone major GOP contender not calling for a flat or flatter tax.

The 2012 contenders also are serving up a platter of familiar conservative fare: calls for deep spending cuts, reduced government regulation and an emphasis on private enterprise as the true engine of job growth and prosperity.

The plans underscore the party's attempt to respond to the biggest voter concerns of the day and capitalize on what they see it as Obama's chief vulnerability, the still shaky recovery. The candidates claim their various plans would help create millions of private sector jobs; just how is not always clear.

With polls showing that most people support increasing taxes on the wealthiest households, as Obama and Democrats are proposing, the GOP flat-tax plans would largely end up as a boon to the wealthiest, independent analyses suggest.

The tax debate coincides with spreading protests, inspired by the Occupy Wall Street movement, against economic inequality. The nonpartisan Congressional Budget Office recently reported the top 1 percent of American earners doubled their share of national income over the past 30 years, to 20 percent.

Some of the GOP plans show depth, complexity and sophistication, Holtz-Eakin said. Not every economist is as charitable or sees the GOP offerings as workable.

"I don't think any of the plans can be taken too seriously as actual policy," said Bruce Bartlett, who held top economic posts in the Ronald Reagan and George H.W. Bush administrations but now considers himself a political independent.

"The Republican goal is to nominate the person who is the most committed, most articulate in terms of the Republican philosophy. What they're competing for is who best represents that core philosophy and articulate it in a way that the base finds satisfying," Bartlett said.

No matter that some GOP dogma, such as an insistence that cuts in business taxes and government regulation will spur private-sector job growth, "is economic nonsense," Bartlett said.

All the GOP rivals would pare federal regulations.

Rep. Michele Bachmann, R-Minn., would kill the Environmental Protection Agency and repeal the 2010 Dodd-Frank financial industry regulation law. Romney is proposing a 10 percent cut in the federal workforce. Former Pennsylvania Sen. Rick Santorum wants to repeal all regulations put in place by Obama. "The federal government kills jobs. We don't need more programs and bureaucrats telling business how to operate," he says.

Economists generally agree the shortage of jobs isn't caused by government overregulation but by a lack of consumer demand. A recent Labor Department survey showed that less than 1 percent of all layoffs in the past four years have been attributed by employers to government regulation.

With consumer spending driving two-thirds of the U.S. economy, those without jobs have little money to spend. Many with jobs fear losing them, or their houses are worth less than their mortgages, so they have little spare cash or borrowing ability.

Killing off Obama's health care overhaul is a common feature of the GOP plans. So, too, is a proposal to offer American companies a chance to bring money generated overseas back into the U.S. without being taxed. But studies have shown that a similar repatriation "holiday" in 2004-2005 had little effect on job growth.

Some Republicans go further than others. For instance, Bachmann says she would consider allowing oil and gas exploration in the Florida Everglades. None of her rivals has been that bold, perhaps given Florida's importance in presidential calculus.

Hoping to coax more U.S. export jobs, Romney threatens to trade penalties against China if it does not boost the value of its currency. "If you're not willing to stand up to China, you'll get rolled over by China," he says. But former Utah Gov. Jon Huntsman, who recently served as U.S. ambassador to China, argues that such penalties probably would lead to a trade war that would hurt both economies.

On taxes, Romney would make incremental changes and move later to a simpler system. For now, he would extend Bush-era tax cuts, lower the 35 percent corporate tax rate to 25 percent and exempt investment income for those earning less than $200,000. He would extract more U.S. oil, coal and natural gas, expand trade pacts and cut federal spending.

Rep. Ron Paul's plan is the most radical. The Texas Republican, a libertarian, would scrap the income tax entirely. He contends the government didn't have the authority to impose it in the first place. He would make ends meet through excise taxes, tariffs, and a smaller government. In the process, he would abolish the Internal Revenue Service and the Federal Reserve.

Cain, the former Godfather's Pizza CEO who has replaced Romney as the GOP front-runner in some recent polls, repeatedly pushes his "9-9-9" tax plan that would cut personal and corporate tax rates to 9 percent each and impose a new 9 percent federal sales tax.

Perry's plan would give taxpayers the choice of paying at a flat rate of 20 percent or adhering to the current tax structure. He would preserve deductions for mortgage interest, charitable donations and state and local tax taxes for households earning less than $500,000 a year and offer a $12,500 exemption for individuals and dependents.

Former House Speaker Newt Gingrich has proposed a 15 percent optional flat tax. Huntsman would set up a three-tiered system with a top rate of 23 percent. Bachmann would replace the tax code with a yet-to-be specified flat tax. Santorum proposes a "simpler, flatter and fairer" tax without offering specifics. He would cut the corporate tax in half and eliminate it for manufacturers who keep jobs in the U.S.

In the past, flat tax schemes - pushed by Democrat Jerry Brown in 1992 and Republican publisher Steve Forbes in 1990 and 2000 - failed to generate much political traction, in part because most plans would put a disproportionate burden on lower-income families.

Quick studies of the current major GOP proposals by independent research groups have made similar findings.

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  • by Promises? Location: enc on Nov 1, 2011 at 06:19 PM
    The "new" House promised to concentrate on jobs. So far, the first thing they did was give themselves 1 week's vacation for every 2 weeks they work-that's at FULL PAY! They also changed the "rules" and swore they would not waste time on frivolous votes. In keeping with that, they decided that giving a recognition to the troops who killed Bin Laben would be frivolous. As of today-there has been NO jobs bill! Today, they spent the day voting that "In God We Trust" is our motto. That is fine, EXCEPT-there was no question about that fact in the first place!! It is, has been, and is already on record that that is our motto- yet- they spent the day voting on that- still no jobs bill! Sure hope they enjoy their "much earned" vacation!
  • by Donna on Nov 1, 2011 at 03:58 AM
    Here's a novel idea. Everyone pays taxes based on income like they do today. Tax all assistance programs. Whatever you pay in during the course of the year is what the government gets. Plain and simple. No filing taxes since there will be no deductions. Only businesses will file. This will save tons of money and get rid of a ton of government jobs in the process. Of course just an idea.
    • reply
      by To Donna on Nov 1, 2011 at 06:19 PM in reply to Donna
      Guess what? Not everyone has their taxes withheld!-DUH!!
  • by Kim Location: enc on Oct 31, 2011 at 03:44 PM
    Keep the millionaire tax cuts-Kim Kardashian is goint to need hers now that she is single again!
  • by 9-9-9 Location: enc on Oct 30, 2011 at 05:37 PM
    According to the Tax Policy Center, the 9-9-9 Cain plan will raise taxes by 58% for the lowest 20% incomes, it will DOUBLE the taxes for the middle class, and give the top 20% in this country a 249% Decrease! This is fair? The gap between incomes is now the same as it was during The Guilded Age when the wealthy stepped across the poor on the streets and right before the Great Depression! You can call it socialism-I don't care-but history tells us that this type of economic gap is the greatest preamble to economic disaster than any other single element!
    • reply
      by Obama Snake Oil Co on Oct 31, 2011 at 05:45 AM in reply to 9-9-9
      Anotherwords, you haven't a clue about that plan so it is better to defer to the socialists at mediamatters....we get it.
      • reply
        by TO OSOC on Oct 31, 2011 at 08:37 AM in reply to Obama Snake Oil Co
        Before you call somebody "clueless", you better look up the Tax Policy Center! It is NOT a part of any "mediamatters"! I realize your paranoia tells you that any facts you haven't heard on FOX must be some sort of conspiracy-but tell the voices in your head they need to be quiet!
        • reply
          by Obama Snake Oil Co on Nov 1, 2011 at 07:38 AM in reply to TO OSOC
          Yes, I go to Ken Shepard for the truth as this is what the very liberal Tax Policy Center said about Obama against many of you got that tax cut? Writing Sen. Joe Biden's (D-Del.) recent suggestion that it's "patriotic" to pay higher taxes, Associated Press reporter Douglass K. Daniel provided a bit of cover for the Obama running mate by citing a left-leaning tax group and ignoring Obama's plans to hike capital gains taxes.: Although Republican John McCain claims that Obama would raise taxes, the independent Tax Policy Center and other groups conclude that four out of five U.S. households would receive tax cuts under Obama's proposals. "We want to take money and put it back in the pocket of middle-class people," Biden said in an interview on ABC's "Good Morning America." The Tax Policy Center may be independent of a political party apparatus, but it is decidedly liberal in orientation, a joint venture of two liberal think tanks, the Urban Institute and the Brookings Institution.
      • reply
        by Anonymous on Oct 31, 2011 at 04:16 PM in reply to Obama Snake Oil Co
        In other words, you are a blind sheep being led to slaughter.
    • reply
      by Anonymous on Oct 31, 2011 at 08:52 AM in reply to 9-9-9
      How can you decrease someones taxes 249%?
      • reply
        by To anonymous on Oct 31, 2011 at 03:43 PM in reply to
        The percentage is of their "tax". ie Their taxes go down 249% of what their "taxes" are-Not their income! It is just math!!
  • by Tyee Location: Hyde County on Oct 29, 2011 at 10:30 PM
    What is the best method to acquire all we can from each of the above candidates? Might be worth investigating?
  • by Anonymous on Oct 29, 2011 at 10:17 PM
    Under a pure flat tax without deductions, companies could simply, every period, make a single payment to the government covering the flat tax liabilities of their employees and the taxes owed on their business income.[13] For example, suppose that in a given year, ACME earns a profit of 3 million, pays 2 million in salaries, and spends an added 1 million on other expenses the IRS deems to be taxable income, such as stock options, bonuses, and certain executive privileges. Given a flat rate of 15%, ACME would then owe the IRS (3M 2M 1M) × 0.15 = 900,000. This payment would, in one fell swoop, settle the tax liabilities of ACME's employees as well as taxes it owed by being a firm. Most employees throughout the economy would never need to interact with the IRS, as all tax owed on wages, interest, dividends, royalties, etc. would be withheld at the source. The main exceptions would be employees with incomes from personal ventures. The Economist claims that such a system would reduce the number of entities required to file returns from about 130 million individuals, households, and businesses, as at present, to a mere 8 million businesses and self-employed.[14] This simplicity would remain even if realized capital gains were subject to the flat tax. In that case, the law would require brokers and mutual funds to calculate the realized capital gain on all sales and redemptions. If there were a gain, 15% of the gain would be withheld and sent to the IRS. If there were a loss, the amount would be reported to the IRS, which would offset gains with losses and settle up with taxpayers at the end of the period.
    • reply
      by To anonymous on Oct 30, 2011 at 05:41 PM in reply to
      You listed all the "deductions" taken by ACME-but none are taken by the employees? When do they get to claim their deductions if what is withheld is the same as what they owe? Bonuses to the executives are tax deductible? So, the higher the bonuses to the executive, the smaller the tax they owe? Hmmmm. As for capital gains, it has already been declared by those proposing this plan that their be NO tax on capital gains. ie. tax labor, but don't tax profit? Hmmm. You claim "without deductions" , but then include the term "taxible income". If there are no deductions-ALL income is taxable!!
  • by Anonymous on Oct 29, 2011 at 10:08 PM
    "Proponents of the flat tax system point out that there is a strong likelihood that another positive effect would be to discourage increased spending by government. The reason for this would be that any tax increase would affect all taxpayers. In the current tax system, government officials are able to win the approval of the public by raising taxes on certain groups to pay for new spending. If everyone's taxes had to go up with any new spending, every new government program would have to be carefully scrutinized. In the long run, the hope would be that government would become more efficient."
  • by Party of Clowns on Oct 29, 2011 at 04:23 PM
    Like I said over and over again......they are a Party of Clowns!
    • reply
      by Zeb on Oct 29, 2011 at 09:44 PM in reply to Party of Clowns
      Rebuttal for - Party of Clowns on Oct 29, 2011 at 07:23 PM -- See how you Democrats are getting now Desperate. They always revert to stupid name that is all they have now. How sad!
    • reply
      by Anonymous on Oct 29, 2011 at 10:07 PM in reply to Party of Clowns
      And why would a flat tax be bad? Do you even know what a flat tax is, or are you just spewing hatred like always without doing your homework?
      • reply
        by Anonymous on Oct 30, 2011 at 04:00 AM in reply to
        This has nothing to do with hatred. I for one spend hours a day viewing all political sides and intentions. I have came to the conclusion that Party Of Clowns assessment of the GOP is as accurate as it gets. Maybe you should do your homework, the writing is on the wall, blatant obstruction by our elected officials should be a criminal offense.
        • reply
          by Obama Snake Oil Co on Oct 31, 2011 at 05:42 AM in reply to
          Viewing political sides and intentions? You spend those hours wasting you time to end of posting name calling. Its always your solution when you get cornered. Well, feel very cornered, Obama is threw and there is nothing you can do despite your posts.
        • reply
          by Anonymous on Oct 31, 2011 at 08:55 AM in reply to
          Why dont you spend hours a day working instead of researching?
      • reply
        by Party of Clowns on Oct 30, 2011 at 04:31 PM in reply to
        To Annon@ 1:07am***Oh, I hurt your feelings? Sorry, but if you are offended, you should be. Please take your head out of the sand and look around. These GOP Clowns are doing everything they can to hamper the recovery efforts. Take your own advise and do the homework. Don't take my word for it.
        • reply
          by Anonymous on Oct 31, 2011 at 08:57 AM in reply to Party of Clowns
          They are doing everything they can to stop the Democrats from their spending spree. The recovery efforts are being hampered by SPENDING MONEY WE DONT HAVE.
  • by Frank Sinatra Location: Heaven on Oct 29, 2011 at 04:16 PM
    Flat tax is a great idea but it will not happen. It would put too many tax attorneys and IRS workers out of a job.

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