Club for Growth President Pat Toomey praised Mayor Rudy Giuliani’s new comprehensive tax reform and reduction plan, unveiled today in Florida, calling it “a bold and innovative proposal that will reward hard work, encourage investment, and promote economic growth for Americans across the economic spectrum.”
The Giuliani tax cut plan would extend the 2001 and 2003 tax cuts immediately; eliminate the Death Tax completely; lower the capital gains and dividends tax rate to 10% and index capital gains to inflation; lower the corporate tax rate from 35% to 25%; and permanently index the Alternative Minimum Tax to inflation with a plan for eventual elimination.
The Giuliani tax cut plan also contains a particularly bold pro-growth tax simplification strategy that would give taxpayers the option of opting into a simple tax plan in which their taxes could be done on one page. Instead of the current tax behemoth, the voluntary tax plan would constitute across the board cuts in marginal tax rates by proposing three simple rates of 10%, 15%, and 30%.
“Giuliani’s tax cut plan will encourage capital formation, and capital is the key driver of productivity, higher wages, and a better standard of living for all Americans,” Mr. Toomey continued. “He does that by not only lowering the capital gains and dividends rates, but also by indexing capital gains to inflation. Also, the Mayor’s plan dramatically lowers marginal tax rates at the personal and corporate level, which will encourage a significant burst of economic activity and growth.”
“The current U.S. tax code is a monstrosity of inefficiency and deterrence, with some of the highest corporate tax rates in the developed world and a tax code that totals more than 66,000 pages. Mayor Giuliani’s tax cut proposal today would dramatically move the American tax code and economy in the right direction. This is exactly the kind of plan economic conservatives should embrace.”
There are several things to add. First, when I saw Rudy, he said something interesting and illuminating about taxes. He saw taxes in two ways: productive and unproductive. He thought unproductive taxes were those that were high compared to other entities. When he was mayor, he compared his tax rates to other large cities in the U.S. As President, he will compare our tax rates to those of other civilized nations. He specifically mentioned corporate taxes which he intends to cut as an unproductive tax. He believes that when taxes are higher than most other places, it drives business and people away. On the other hand, those taxes that are right in the middle are productive.
It is also clear that the battle lines will be drawn come the general election between the Republicans who will defend the Bush tax cuts and point to them as the catalyst to a four year pro growth agenda and the Democrats who will blame the tax cuts for what they see as a faltering economy. (Here is my defense of the tax cuts.)
Simplification of the tax code is something that a lot of pols have promised and so far it hasn't been delivered. Rudy also touched upon the alternative minimum tax. I am also in favor of its elimination, however, I have already pointed out that merely eliminating it is not that simple. I don't know the specifics of Rudy's plan to eliminate AMT however it must account for the significant loss in revenue.
Finally, this endorsement of Rudy by CFG is not their first, here is how they described his economic management as mayor of New York.
"Mayor Giuliani's economic record is not perfect, but he deserves credit for the remarkable nature of his accomplishments," Club for Growth President Pat Toomey said. "In a city long accustomed to high taxes and ballooning budgets, Rudy Giuliani successfully cut taxes; kept spending below the growth of inflation and population; instituted sweeping welfare reform; privatized and deregulated many aspects of the city's bulky bureaucracy; and fought aggressively for school choice."
The white paper emphasizes the liberal context in which Giuliani was forced to govern. Although the Mayor took a number of anti-growth positions-such as his opposition to NAFTA, his support for McCain Feingold, and his opposition to several tax cuts-he used free-market, limited-government values to turn around a faltering economy in a political environment dominated by a left-wing City Council; public sector labor unions; social welfare activists; and an unfriendly media.
"Rudy Giuliani will still need to flesh out his positions on a number of federal issues, and we hope he will reconsider his few anti-growth positions," Mr. Toomey said. "But it is impossible to ignore Giuliani's overall commitment to a pro-growth philosophy and his executive talent for implementing that philosophy in a hostile political environment."
This plan should be music to the ears of all fiscal conservatives, a huge base for Reps. Rudy needs to get back in the game. Only time will tell if this plan gets him there.
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