(Audio) Newt talks his tax plan with Larry Kudlow

Link.

Newt to Perry: Let's compare flat taxes

Today on Twitter, Newt sent this out:

.@GovernorPerry If u r going to bump plans w/ my friend Herman, then you can bump plans w/ me. Let's compare flat taxes.

Here's the link on Newt.org where you can compare the two.

Which would you like better: a 15% rate or 20%?

Newt's op-ed on a flat tax in an Iowa newspaper

Newt wrote an op-ed in the Quad City Times today about his support of a flat tax. The whole piece, which can be read on Newt.org, is worth reading, but I will only quote the part specifically on the flat tax:

The key to a robust recovery in job creation is to simplify the tax code and maximize capital investment, which begins with eliminating the capital gains tax and the death tax, reducing the corporate tax to 12.5 percent, and 100 percent expensing of all new capital equipment purchases.

These tax changes will liberate private capital to move quickly to the most productive investments, thereby accelerating economic growth. This is the opposite of the failed model practiced by the Obama administration, which is bureaucracies steering taxpayer stimulus dollars to allegedly “shovel ready” jobs and politically connected firms such as Solyndra.

At the same time as we liberate capital to create new jobs, we must liberate taxpayers from the IRS tax code, which is why my jobs proposals also call for an optional flat tax of 15 or less%. All workers and businesses would have the freedom to choose each year to file their income taxes either under the new flat tax option with limited deductions or under the current U.S. income tax code. Anyone who strongly favors a deduction or credit under the federal government’s current complex income tax system would have the choice to keep filing that way.

This optional flat tax system will create a new personal deduction for every adult of $10,000 to $12,000 (double for married couple), which would be above the established poverty level at $40,000 to $48,000. The current $1,000 tax credit for each child age sixteen or younger would also apply, as would the current earned income tax credit (EITC).

An optional flat tax reform will be simple: tax returns can be done on one sheet of paper. Subtract from income a standard deduction and deductions for charity and home ownership, multiply the result by the fixed single rate of taxation of at most 15%, and the process is over.

The optional flat tax could save taxpayers an estimated $400 billion each year in costs of record keeping, paying for tax advice, and filling out complicated tax returns. This savings doesn’t even account for countless hours of aggravation and worry and the sheer complexity of tax compliance. These tax compliance savings are the functional equivalent of a permanent, pro-growth tax cut and will provide a substantial boost to annual growth rate.

This concept of an optional flat tax would give American taxpayers an opportunity to choose simplicity versus complexity and a single rate over a lot of deductions.

Because the flat tax is optional, it does not raise taxes on a single person or unfairly impact seniors, lower income workers, or the poor.

Once we combine these pro growth tax reforms with my other reform proposals for welfare reform, social security, and spending, we will experience a stunning and swift turnaround in the economy.

Alex Pappas on DailyCaller.com writes of Newt's long-standing supporter of the flat tax:

According to Gingrich’s campaign, in 1997, as Speaker of the House, he said, “There are things I would like to do like a flat tax with virtual elimination of the IRS.”

In 2005, he wrote in Steve Forbes’ book about the flat tax that, “I believe there is a real opportunity for a similar grass roots revolution imposing the flat tax on Washington. As people learn how much money and time they can save through a flat tax, they are going to demand a simple alternative to the complexity and uncertainty of the Internal Revenue Service.”

In a 2008 National Review op-ed, Gingrich wrote that, “An optional flat tax would save taxpayers more than $100 billion per year and reduce compliance costs by over 90 percent. This is a stimulus package that would have an immediate effect on our American economy.”

Newt and "niche issues"

A recent Washington Post story highlights Newt's focus on what the columnist Philip Rucker calls "niche issues."

So at a private fundraiser last week in Newport Beach, Calif., he devoted much of his speech to the disease.

In the audience, it turned out, were four members of the Alzheimer’s Association’s Orange County chapter.

“This is great,” they later told Gingrich, according to an aide. “You get it!”

Texas U.S. Representative Michael Burgess, who has endorsed Newt for President and who wrote an article with him about the flat tax, said that Newt "probably" understands Alzheimer's better than anyone.

From Rucker:

After Gingrich announced his candidacy in May, his first speech was to a convention of Alzheimer’s advocates. There, he warned that the disease could cost the government some $20 trillion over the next four decades. He told the industry group that Alzheimer’s research is “grotesquely underfunded,” and he pledged to invest more public money in finding a cure.

Rucker:

But as Gingrich sees it, Alzheimer’s, as well as other niche topics such as military families’ concerns and pharmaceutical issues,are priorities for passionate patches of the American electorate. By offering himself as a champion of pet causes, Gingrich believes he can sew together enough narrow constituencies to make a coalition -- an unconventional one, yes, but a coalition nevertheless.

Of course, the implication is that Newt is only now paying attention to those issues in order to gain a political advantage.

Tony Blankley, Newt's Press Secretary when he was Speaker, wrote a column in order to disprove that.

From that article:

To read the article in question, one would think Newt had thought up this little “niche” Alzheimer issue a couple of weeks ago -- just in time for his revived campaign. Well, in fact, I remember Newt talking to me about the coming crisis in Alzheimer’s back in the 1990s. And in 2007, the Alzheimer's Association along with the Congressional Task Force on Alzheimer’s Disease called for the creation of the Alzheimer’s Study Group. Newt was named co-chairman, along with former Democratic Sen. Bob Kerrey.

As to the issues and costs of taking care of our military families, anyone remotely familiar with the projections of the defense budget knows that if we don’t improve the attitude toward and better manage the costs of taking care of our military and veterans and their families, we will risk lower volunteer rates and unsustainable cost increases. Once again, Newt has been advocating shrewdly about this matter at least since the 1990s, when he used to discuss it with me and others. Of course, Newt came from a military family, so he had an unfair advantage in understanding the issue.

Here is the aforementioned speech to the Alzheimer's Association:

What is the first Google result for "Pawlenty flat tax"?

So I found out a couple of weeks ago that someone who clicked on this site searched on Google for "Pawlenty flat tax." Interested, I Googled the search terms.

I found out that, to my amusement, this post of mine, in which I criticize Pawlenty for not having a bold enough proposal, is the top result on Google.

The problem with Pawlenty's flat tax proposal

As I said in my last post, I think Tim Pawlenty's economic proposals yesterday were largely in the right direction.

My biggest problem with the way he would reform the tax code is that it is not bold enough. Pawlenty would replace the current tax code, in which there are six rates, with two: 10% and 25%. For those individuals who make $50,000 and families that make $100,00 and below, they would be taxed 10%. Those above would be taxed at 25%.

Newt calls for one rate: 15%. The advantage of one single rate is that when politicians come calling for more tax revenue so they can spend more money, everyone knows that they will have to chip in. Currently, liberals can go to some voters and say, "Don't worry, that new program will be paid for when we raise taxes on that guy over there, not you." That would not be possible if there was just one rate.

But even then, Pawlenty proposed good policy. But it should not be how conservatives start the tax reform debate. By having an opening position of two rates, once negotiations start in Congress -- where, almost inevitably, the plan will have to be watered down -- it could soon turn into, say, four rates. Which is not much better than what we have now.

With Newt's single rate reform, even if there are not enough votes for it -- read: too many Democrats in the Senate -- and it had to be changed to get enough votes, the "compromise" could be to have two rates. Which is a lot better than the current mess.

So while Pawlenty's plan would be a good ending point, it is not a good strategic beginniing point.

Some of the highlights of Club for Growth's report on Newt

Club for Growth, whose negative White Paper on Mike Huckabee three years ago gave the former Arkansas Governor a lot of bad press, released their first paper this cycle today. Newt was the subject.

From the White Paper: "Gingrich can be one of the most clear-eyed and forceful advocates for supply-side economics and the value of free enterprise." They criticize him about his support of some tax credits, but as they note, there is not going to be any Presidential candidate -- especially a serious one -- who does not.

Club for Growth: "In a 2008 op-ed, he enthusiastically praised the idea of an optional, single-rate income tax reform proposal." The report does not say it, but last week Newt included an optional, 15% flat tax in his 9 point "Gingrich Jobs and Prosperity Plan."

The Club commends Newt on, among other things, free trade, wanting the repeal of Sarbanes-Oxley and many other burdensome regulations, personalizing Social Security, school choice, tort reform, and political free speech.

The report's summary states:

One could reasonably expect a President Gingrich to lead America in a pro-growth and limited government direction generally, possibly with flashes of real brilliance and accomplishment, but also likely with some serious disappointments and unevenness.

Of course, the same can be said of every political leader, even Ronald Reagan, who irked many conservatives over his two terms in office -- including a young Newt Gingrich.

No one is able to get 100% of the policies they want. Ronald Reagan's philosophy was to get 70% of what he wanted, then once people saw how well it worked, he would get the remaining 30%.

Human Events: "Why Newt Gingrich Will Be a Formidable Contender"

Tony Lee, who is covering the 2012 Presidential election for the conservative newspaper Human Events, wrote an article touting Newt's "politics, policy, and publicity."

"Last week, Newt Gingrich showed why he will be a more than formidable candidate," Lee wrote. "During a series of events, he displayed how he can combine politics, policy, and publicity to leverage his ideas and brand."

Lee then recaps Newt's week. It started with a tele-townhall with Tea Party groups in which "Gingrich showed his depth and range on a variety of issues ranging from immigration, to allowing people to opt-in to a flat tax rate, to criticizing President Obama for seemingly caring more about offshore drilling in Brazil than in America."

Then he called on George Washington University to invite Paul Ryan to give a response to President Obama's speech in which he attacked Ryan after inviting the Wisconsin Republican to it.

Newt told CNBC host Larry Kudlow that he would not reappoint Federal Reserve Chairman Ben Bernanke.

In front of Tea Party groups in Charleston, South Carolina, Newt ran through what his energy policy would look like:

1) Replace the Environmental Protection Agency, which has become a job-killing regulatory engine of higher energy prices, with an Environmental Solutions Agency that would work cooperatively with local government and industry to achieve better environmental outcomes while considering the impact of federal environmental policies on job creation and the cost of energy.

2) End the ban on oil shale development in the American West, where we have three times the amount oil as Saudi Arabia.

3) Give coastal states federal royalty revenue sharing so that state’s budgets directly benefits from offshore development.

4) Enact a loser-pays law to force the losers in environmental lawsuits to pay all legal costs for the prevailing side, which will reduce frivolous lawsuits that are employed simply to stop energy production.

5) Finance cleaner energy research and projects with new oil and gas royalties.

6) Appoint a commission of engineers and scientists, not politicians, to study the damaged nuclear reactor in Japan and determine if any changes need to be made to US nuclear power standards.

Gingrich wrapped up his week at the Brookings Institution ,at which he gave a detailed speech about health care policy.

Lee concludes:

When on his A-game, Gingrich is an intellectual force and heavyweight who knows how to market his ideas in a compelling way that is understandable by the general public. Gingrich is also savvy and nimble in framing how his ideas can be solutions for contemporary problems that the country faces at the moment.

The more the 2012 contest is focused on wonkish policy, Gingrich will have more of a homecourt advantage and the better off he will be.

Lee's point about Newt being able to market his ideas is an important one. He not only is the best ideas man in the party; he also is the one who comes up with such slogans as "Drill Here, Drill Now, Pay Less."

Gingrich on the flat tax vs. Fair Tax debate (with video)

Starting in 1960, when Milton Friedman called for a flat tax, through the publication of a book devoted just to it by two Hoover Institution scholars, to Steve Forbes basing his Presidential campaigns around it, the flat tax had been the desired reform among most conservatives who wished to get away from the convoluted, wasteful, job-killing tax code.

In recent years, however, an increasing number of conservatives have pushed for the Fair Tax, which would eliminate all taxation of income and savings and replace it with a 23% national sales tax.

Personally, I think -- from a pure policy perspective -- that the Fair Tax may be the better of the two; there are some potential pitfalls with that system, though. But from a realistic perspective, the flat tax, in my opinion, is where the energy of the conservative movement should be. The worst-case scenario is that it accomplishes 90 or 95% of what the Fair Tax would. The big advantage the flat tax has is two-fold:

1. For the Fair Tax to be implemented, and to avoid both a national sales tax and income tax, the 16th amendment would have to be repealed. The effort, even if successful, would take years and untold amounts of political capital.
2. It is very popular right now, with a 17% optional flat tax being supported by a margin of 61-32% where only 43% support the Fair Tax.

In 2008, Newt, along with Texas Representative Michael Burgess, penned an op-ed in support of the flat tax.

Here is a video of him talking about the fair tax: