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?
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?
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