The flat tax and a flat-lining economy

October 28, 2011|By Jules Witcover

As unemployment continues to dominate the nation's political consciousness, the Republican presidential candidates continue to think and talk about tax reform. It's clear evidence that their primary focus is winning the GOP presidential nomination rather than lifting the country out of its economic doldrums.

How else to explain their intramural debate on taxes, most recently highlighted by Texas Gov. Rick Perry's resurrection of the old flat tax that business magazine magnate Steve Forbes floated in his failed bids for the same prize in 1996 and 2000?

The catalyst for reintroducing this old economic turkey has been former pizza impresario Herman Cain's trick 9-9-9 tax plan for individual, corporate and sales taxes. Its simplicity, plus Mr. Cain's appealing carnival barker pitch, elevated the scheme to center stage in the Republican debates, leading Governor Perry and the others to find ways to grab a share of the spotlight.

Mr. Perry, tardy in coming up with his tax reform plan, is now advocating a 20 percent flat tax on individual and corporate taxes, more than double Mr. Cain's 9 percent, but he would allow taxpayers to opt for the existing plan that includes deductions for home mortgage payments and charitable contributions. Newt Gingrich comes down somewhere in the middle, with the option of a 15 percent flat individual income tax rate and 12.5 percent tax on corporate income.

Mitt Romney, who shares the lead with Mr. Cain in some polls, would lower the corporate rate and extend the Bush individual tax cuts for all taxpayers, including the wealthiest Americans, whose cuts are the prime target of President Obama in what the Republicans rejoice in calling class warfare.

The most obvious rap against the flat tax, as advanced in various versions by Messrs. Cain, Perry and Gingrich, is that it would hit the middle class harder. It's a contention that Mr. Perry's plan seeks to counter by allowing taxpayers to stick with the existing system. However, the Republican flat-tax advocates don't seem unduly concerned about how lower income voters respond to their proposals; their immediate objective is winning the GOP primaries and caucuses, in which most participants are likely to be in the higher income brackets.

Meanwhile, the Republican candidates seem content to dodge the debate over the stagnant 9.1 percent unemployment rate by stonewalling President Obama's American Jobs Act, which would bankroll infrastructure building and repair work on roads and bridges around the country.

Critics have scored debating points by noting that the Obama administration has yet to spend all of the infrastructure funds already appropriated, and that the so-called "shovel-ready" jobs that would put millions of Americans back to work either are not there or require much more time to get underway. Visions of a resurrection of the New Deal's Civilian Conservation Corps have not materialized.

Mr. Obama, now in full campaign mode and having put his conciliatory approach on hold at least temporarily, is at last trying to blow the whistle on the Republicans, taunting them to come up with a serious alternative to his jobs plan. Having failed in an initial bid to get a comprehensive plan acted on, he now promises to offer it piecemeal in the hope of getting Republicans to vote for pieces they have indicated they might favor.

In all this, the Republicans continue to cry class warfare against the Democrats at a time when corporate and bank profits are climbing sky-high and are being pocketed rather than going into rehiring laid-off workers and creating jobs. It's a political strategy best suited for the Republican primary and caucus season, in which the bulk of voters participants will be Republicans. For the time being, the reasoning seems to be that the winner can address the concerns of independents and Democrats in the general election campaign next fall.

So the Republican presidential candidates are leaving the heavy lifting on job creation to President Obama, who has had painfully little success so far. Instead, they are focusing on how they can best protect their own base constituency in the business and corporate investment community. Thus, we are seeing the resurrection of the flat tax, as the flat unemployment rate limps on.

Jules Witcover is a syndicated columnist and former longtime writer for The Sun. His email is juleswitcover@comcast.net.

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