Former Utah Gov. Jon Huntsman rolled out his economic agenda on Wednesday, a plan which includes a revenue-neutral tax swap that would cut some taxes while effectively increasing others. Its impact on the average taxpayers’ bottom line? That’s debatable.
“It’s time for America to start working again; it’s time for America to start building things again; it’s time for America to compete again,” Huntsman said in rolling out his plan.
We agree .. but will his ideas help accomplish those objectives? And can they jump-start his flagging campaign?
We’ll see.
According to the Huntsman plan, America’s top individual income tax rate would be slashed from 35 percent to 23 percent. Brackets for other income levels would be reduced, too. Meanwhile, taxes on capital gains and dividends (i.e. investment income) would be eliminated – while America’s corporate tax would be cut from 35 percent to 25 percent.
Huntsman would also eliminate the controversial “alternative minimum tax,” which was instituted in 1969 as a way to keep rich people from exploiting tax loopholes but has evolved into an unfair tax hike on millions of Americans.
Other components of the Huntsman plan? The repeal of so-called “Wall Street reform” and efforts to curb the “serious regulatory overreach” at the Environmental Protection Agency.
So far so good, right? Yes. In fact, we love every bit of that.
The only problem? Huntsman didn’t stop while he – and American taxpayers – were ahead. In fact, every single penny of tax relief he’s proposing would be offset by … wait for it … a penny in tax hikes. Specifically, Huntsman would eliminate every single tax exemption on the book – including many common exemptions used by virtually every American to lower their income tax bill.
In other words, Huntsman is a slave to the failed dogma of “revenue neutrality,” which holds that all tax relief must be accompanied by a corresponding tax increase.
That doctrine ignores several key realities. First, it ignores the fact that the federal budget (like the federal government it funds) has assumed obscenely-large dimensions in recent years and is decades overdue for a draconian downsizing. It also ignores the fact that the long-term key to reducing America’s deficit is a vibrant and prosperous economy – one which can only be achieved by broad-based tax relief that stimulates job growth and expanded private sector investment (thus reducing the number of people reliant on government aid).
Finally, Huntsman’s plan ignores the reality that tax hikes don’t have to be “revenue neutral.” Beyond the stimulative effect of tax relief on the economy (and the corresponding decline of the culture of dependency), there is an optimum rate of taxation at which government revenues would be maximized.
Needless to say, we’re way, way above that optimum level – which is actually choking off tax revenue rather than expanding it.
The first part of Huntsman’s plan (the tax cuts) would get America’s tax code closer to that “optimum” level – which makes the second part of his plan (the tax hikes) totally unnecessary.
Huntsman – whose “moderate” candidacy and former bromance with U.S. President Barack Obama have him lagging in the polls – is the first Republican to roll out a specific tax plan.
For that, we credit him. We’ve been screaming throughout the 2012 election process that the Republican field needed to offer concrete, substantive economic proposals instead of just nice haircuts and a bunch of tired old “limited government” rhetoric. Huntsman has done that. In the process he’s also smartly called out his former boss – who he once referred to as a “great leader.”
“As the Obama Administration has dithered, other nations are making the choices necessary to compete in the 21st century. I’ve seen that first hand,” Huntsman said.
The problem, though, is that Huntsman simply doesn’t have enough faith in tax cuts – which means he lacks faith in our ability to make better decisions with our money than the government. Like other moderate Republicans – including S.C. Gov. Nikki Haley – he apparently believes that every dollar kept out of government’s grubby paws must somehow be replaced with another dollar of your money.
That’s nonsense – particularly with so much unnecessary government waiting to be cut.
Here’s the deal. Any Republican with the stones to propose real tax relief – not more of these status quo tax swaps – need only to give a two-word answer when asked by the legacy media “how you gonna pay for that?”
Those two words?
“With growth.”
Had that been Huntsman’s “second act” (as opposed to a massive tax hike), he would have immediately jumped to the top of our list of preferred presidential candidates. As it stands, though, he’s exactly what we thought he was … a fiscal “moderate” intent on swapping taxes at a time when staunch fiscal conservatism (and tax cuts) are what this nation requires from its next president.
Having said all that, at least he’s laid his cards on the table … which is more than can be said for the rest of the field.
Pic: via Daylife
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By Robert September 1, 2011 at 10:47 am
This notion of eliminating capital gain and dividend taxes is just crazy. I know a few people who make their entire living off capital gains and dividends. So they would pay no taxes????
Now, do the rates need to be cut?yes.
And I agree with eliminating all exemptions. Sorry, buying a home is something to achieve, not to be federally funded.
I like some of what I hear from Huntsman, but just like every big party politician, he goes to far on some things, and not enough on others.
By Ohmaar September 1, 2011 at 11:17 am
Here is what I would LOVE to hear from a presidential candidate:
“The first year I’m elected president, I’m going to cut taxes — ALL taxes — across the board.
My second year, I’ll cut them again.
My third year, I’ll cut them again.
And again.
And again.
And I’m going to KEEP cutting taxes EVERY year until revenue stops INCREASING.
And the year revenue stops INCREASING, I’ll cut taxes one more time, because by then the government will be so flush with money we won’t be able to refund it back to taxpayers fast enough.”
By Tunes'n'news September 1, 2011 at 11:45 am
Agree with Robert. Capital gains and dividends should be taxed. It could be graduated, so that higher earners who have income mostly or entirely there do pay something.
By Lika Madiq September 1, 2011 at 12:52 pm
S.O.S we’ve been hearing from Republicans for years that has never worked before and will never work ever. Tax the poor, give the money to the rich. Unlike most other GOP candidates, who are merely puppets of the ruling class, Huntsman is an actual member of it. His father is a multibillionare, and Jon is just another member of the Lucky Sperm Club, so one would expect him to advance an agenda that favors making America safe for plutocracy.
By Oh Brother! September 1, 2011 at 1:48 pm
I am so tired of the “cut taxes” mantra when we still have a huge debt that we must pay off. This debt is already incurred and both Democrats and Republicans obscenely participated. We must accept the consequences.
It’s like a man taking his homemaker wife on an three week Mediteranean ultra luxury cruise amd charged it to his credit card. It was fun at the time yet when the bill came, he is as sick as a dog that ate the dead skunk in the middle of the road. Too bad, but the bill has to be paid, so the family tightens its belt, he gets a second job and the wife goes to work at a Day Care Center. They keep up the austerity plan and extra work until the debt is paid off. Meantime the children (who did not get to go on the cruise) have to do without things they want because their Dad made a stupid decision. Hopefully the kids did not scream: “Dad, you overspent and now we suffer – so as punishment, we want you to ask your employer to cut your salary!” Hopefully they did not scream: “Don’t pay the credit card bill!”
Our Congress took a cruise and we are the kids. The rational things for Congress to do is (1) resonably cut spending and; (2) reasonably increase tax revenues on those who can afford to pay more (and who should pay more). Then use excess tax revenues to pay off the debt as quickly as reasonably possible. Once it is paid off, we should build a reasonable government excess for emergencies. Then we can reduce taxes (in a way that benefits all Americans) to level off revenues and spending. During the years it takes to pay off the Debt, Congress could work together (with taxpayer input) to develop the tax reform package. The plan would be ready to go when the Debt is paid. The agreed upon plan would be ready when the time came to implement it. Note the key word throughout is “reasonable”.
By Citizen Cicero September 1, 2011 at 7:41 pm
“Huntsman would eliminate every single tax exemption on the book – including many common exemptions used by virtually every American to lower their income tax bill.”
The obscenely-complex federal tax code, which encourages consumption and not saving or investment, needs a complete overhaul, including not just individuals but also C corporations and flow-through entities (LLCs, partnerships and S corporations).
He’s merely “tapping” on the problem.
I’m unimpressed.
By eggaday September 1, 2011 at 8:20 pm
please don’t vote for a mormon
By Nicol September 2, 2011 at 6:17 am
This plan does not deserve to be taken seriously. Why should taxes on dividends and capital gains be eliminated? It is the super wealthy who make most of their money that. I think it is too low already.
By another "plan"; great September 2, 2011 at 9:58 am
We are so much like the Soviet Union of the 80′s(right before collapse) it’s funny.
Every candidate marches out these new economic plans that will supposedly “save” the day in terms of deficit spending, whether it’s through total tax increases or in Huntsman’s case-shuffling the tax burden around in the hopes it will create “growth”.
How many “5 year plans” did the USSR go through before finally collapsing under it’s own weight?
These jokers act like rearranging the deck chairs on the Titanic makes them brilliant or something…
It’s very simple, if you can’t grow more income to steal from the tax cattle you have to stop spending.
In my opinion, we are “tappped out” as a nation….if you tax more you’ll get less in the long run(after more business flight & bankruptcy)….so that means we as a nation have to spend less, PERIOD.
It’s doesn’t take an economic “plan” that’s complicated; in fact it would take me less than 5 pages, typed & double spaced, to eliminate 1/2 our spending.
These geniuses sure do have the wool pulled over the sheeples eyes.
By AMT reformer September 2, 2011 at 3:01 pm
Huntsman has identified one “monster” in the tax code: the AMT (alternative minimum tax), which should be modified to reach only the very wealthy, say those with adjusted gross incomes of $1 million, indexed to inflation.
While in 2002 only about 2 million taxpayers paid AMT, nearly 46% of taxpayers with incomes between $75,000 and $100,000 paid the AMT in 2010.
Now, that’s just a “starter” that ALL candidates will embrace.
NEXT good tax proposal, please?
How about a BOLD tax proposal, not this softball stuff?