Newt’s Plan, Mitt’s Morass By Deroy Murdock

Despite losing Tuesday’s Florida primary, Newt Gingrich used his Sunshine State effort to showcase his voluntary 15 percent flat tax — 2012’s smartest idea yet, both strategically and substantively. Through the November 6 election, this concept can inoculate Republicans from the Democrats’ ceaseless lies about the wealthy “not paying their fair share” of taxes. And, if implemented, Gingrich’s prescription would reinvigorate America’s feeble economy.

Among the barbs that Gingrich and Willard Mitt Romney traded, the former House speaker made this generous-sounding comment at the January 23 Tampa debate:

“I’m prepared to describe my 15 percent flat tax as the Mitt Romney flat tax,” Gingrich declared. “I’d like to bring everybody else down to Mitt’s rate, not try to bring him up to some other rate.”

As Gingrich further explained at the January 26 Jacksonville face-off:

I have proposed an alternative flat tax that people could fill out where you could either keep the current system — this is what they do in Hong Kong — . . . with all of its deductions and all its paperwork, or you’d have a single page: ‘I earned this amount. I have this number of dependents. Here is 15 percent.’ My goal is to shrink the government to fit the revenue, not to raise the revenue to catch up with the government.

Gingrich’s initiative is excellent politics. President Obama and his liberal pals simply refuse to acknowledge the latest IRS data, which irrefutably demonstrate that the oft-excoriated top 1 percent of filers in 2009 generated 16.9 percent of the nation’s income and paid 36.7 percent of its income tax. Meanwhile, the Tax Policy Center reported last August that in 2011, those earning between $20,000 and $30,000 paid an effective rate of 5.7 percent in combined income, payroll, corporate, and death taxes. Those who made at least $1 million paid 29.1 percent.

Yet again, Obama ignored these facts when he told the National Prayer Breakfast last Thursday, “It’s hard for me to ask seniors on a fixed income or young people with student loans or middle-class families who can barely pay the bills to shoulder the burden alone.”


If Obama spent 30 seconds with these statistics, he would see how grossly dishonest his statement was — and at a prayer breakfast, no less!

Nonetheless, Obama and his battalions of class warriors demand the “Buffett rule,” which would make every millionaire pay at least a 30 percent tax rate. Presumably, this is “fairer” than letting them pay a lower percentage of their incomes in taxes than do their secretaries. Giga-wealthy investor Warren Buffett claims that he pays a smaller share of his income in taxes than does his secretary, Debbie Bosanek. Buffett could reverse this today by paying himself more than a mere $100,000 in salary and taking less of his income in capital gains. This quickly would move him from a 15 percent rate to 35 percent. Buffet should do this right now, or stop whining.

If Americans seek “fairness,” why hike the share of anyone’s income sent to Washington? Instead, free everyone to choose an equal and lower rate. Even as an option, this would depopulate America’s tax shelters. Simplicity and much-curtailed compliance costs have their own appeal.

Even at 15 percent, the rich will pay more than those less affluent. For argument’s sake, someone who earns $100,000 would pay $15,000 in taxes, while someone who makes $100 million would pay $15 million. Delicate calculations confirm that $15 million exceeds $15,000. The rich will pay many more dollars in taxes, but as a proportion of income they will be equal with everyone else. Hello, “fair share.”

Gingrich’s overhaul would kill taxes on death and capital gains while preserving the mortgage and charitable deductions and creating a $12,000 personal deduction.

Gingrich also would chop America’s corporate tax from 35 percent (the industrial world’s second highest, after Japan’s) to a flat 12.5 percent, which would tie Ireland’s as the lowest and most competitive among developed nations. Coupled with immediate 100 percent expensing of capital purchases, such a stimulus would unleash dramatic economic expansion — rather than the Obama-style “stimulus,” which yields bankruptcies, layoffs, FBI raids, and billions of dollars smoldering in the headquarters of politically connected “green” companies.

Compared to Gingrich’s gutsy blueprint, Romney’s exhibits the caution that has made the former Massachusetts governor the “Oh, well, if we must” choice, even among his supporters.

While Romney would ditch the death tax and cut the corporate tax to 25 percent, he would preserve today’s income-tax rates. He would scrap taxes on interest, capital gains, and dividends but — echoing Obama — only for those making less than $200,000.

Leading supply-siders consider Romney incapable of carrying the tax-reform torch. “Mr. Romney’s tax proposals,” Arthur Laffer wrote in Tuesday’s Wall Street Journal, “don’t have the boldness or internal integrity of Mr. Gingrich’s personal and business flat taxes.”

“Romney is unwilling to fight for sweeping, Reaganesque tax cuts for fear Obama will hit him for ‘helping himself and his rich friends,’” laments Steve Forbes, the publisher and free-market guru who has advocated a flat tax since his 1996 presidential bid. “Romney is engaging in a preemptive surrender. Unfortunately for him, it won’t save him from Obama’s class warfare, and it tells voters that he doesn’t have the stomach to push pro-growth measures that will rile the Washington establishment.”

Republican primary voters now face mixed messengers: Gingrich possesses a luggage carousel worth of personal baggage, a visionary tax plan, and the courage of Godzilla. Romney presents a mere tote bag of quirks, a tepid tax proposal, and the bravery of a hummingbird.

— New York commentator Deroy Murdock is a nationally syndicated columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution, and Peace at Stanford University.


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