Team Romney tells me there will be a bolder tax-cut plan released either at the debate tomorrow night (if Mitt gets it in) or more formally at his Detroit Economic Club speech on Friday. I’m embargoed from releasing details until tomorrow. But I can say that the new plan will be across-the-board with supply-side incentives from rate reduction, and that it will help small-business owners as well as everyone else.
Phase two has finally arrived! What might it look like? Well, Romney’s 59-point jobs plan promises the following:
In the long run, Mitt Romney will pursue a conservative overhaul of the tax system that includes lower and flatter rates on a broader tax base. The approach taken by the Bowles-Simpson Commission is a good starting point for the discussion. The goal should be a simpler, more efficient, user-friendly, and less onerous tax system. Every American would be readily able to ascertain what they owed and why they owed it, and many forms of unproductive tax gamesmanship would be brought to an end. Conversely, tax reform should not be used as an under-the-radar means of raising taxes. Where reforms that simplify the code or encourage growth have the effect of increasing the tax burden, they should be offset by reductions in marginal rates. Washington’s problem is not too little revenue, but rather too much spending.
In addition to those guidelines, I think we can add the following:
– Romney has said he doesn’t want to raise capital gains tax rates, which Simpson-Bowles does.
– Romney wants to lower the corporate rate to at least 25 percent, meaning the top marginal tax rate probably needs to be in that vicinity.
– Romney is unlikely to suggest a net tax increase.
– Romney is unlikely to propose anything that would result in his own taxes directly being cut.
– Romney is unlikely to suggest “paying for” upper-income tax hikes by raising taxes on the middle class.
– Romney economic adviser Glenn Hubbard recently suggested “a progressive consumption tax, equalising the tax treatment of debt and equity, and drastically lowering tax rates on dividends and capital gains.”
A few weeks ago, I suggested two tax plans for Romney, an Entrepreneur First plan and a Family First plan:
There’s the Bowles-Simpson plan, which would get rid of all tax breaks and lower the top rate to 23 percent. Jon Huntsman stole it and then modified it by getting rid of investment taxes. That would be a great option for Romney, too. Call it the Entrepreneur First option and stress how it would boost growth, income, and jobs.
Or Romney could go with the Family First option. Under a plan created by conservative economist Robert Stein, rejiggering tax rates and tax credits would create a system where middle-income families with kids under 18 would pay substantially less in taxes while high-income workers and upper-middle-income taxpayers who do not have children in the home would pay more. Stein would also eliminate the double taxation of corporate income and cut the effective tax rate on capital investment.
In a pair of articles— here and here—the folks over at National Review have, in effect, suggested that Romney combine my two ideas, cutting marginal tax rates plus a fatter child tax credit for parents that can be applied against either income or payroll taxes. Pro-growth. Pro-family.
I like that approach a lot, as long as it also gets rid of corporate welfare and begins to phase out the mortgage interest deduction. The only two individual deductions or credits that I have much use for are the child tax credit and the charitable deduction. Among other things, both the family and civil society are counterweights against the State.