On Tuesday Tim Pawlenty gave a big speech on re-booting the economy. He talked up tax reform, but was hazy on details.
On the corporate side, he favors both rate reductions and base broadening by the elimination of "special interest handouts — carve-outs — subsidies — and loopholes".
But on the personal (and small business) side, he only talked about his plan for two rates (three, if you cout the zero bracket):
On the individual rates we need a simpler — fairer — and flatter tax system overall. I propose just two rates — 10% — and 25%.
Under my plan — those who currently pay no income tax would stay at a zero rate. After that — the first fifty-thousand dollars of income or one-hundred thousand for married couples — would be taxed at 10%.
Everything above that would be taxed at 25%. That’s it.
A one-third cut in the bottom rate.To allow younger — middle — and lower-income families to save and build wealth. And a 28% cut in the top rate — to spur investment and job creation.
OK, he did say "simpler" as well as flatter. Normlly that would imply the elimination of some deductions to broaden the tax base. But Bloomberg has this:
Pawlenty wouldn’t target any of the popular personal tax breaks, such as mortgage interest deductions.
“In the individual tax code, we’re not proposing to change the tax deductions, exemptions or credits,” he told reporters after the speech.
So, a simpler tax that does not include simplification (other than fewer brackets). Baffling. And annoying - my Official Editorial Opinion is that tax simplification (a worthy goal!) can only be achieved in conjunction with tax cuts, so that people are fighting over how much they win, not whether they win or lose. Bush lost an opportunity in 2001; I have a hard time believing we can "afford" tax cuts just now, but if we are going to cut them and keep our complicated tax code, well, that will be another wasted opportunity.