Thompson talks taxes

Fred Thompson released a 7-point tax plan on Sunday that incorporates a lot of policies that have been proposed by George Bush-- whether that makes it a "conservative" plan is up for debate.

The plan would, among other things, maintain Bush's tax cuts that are set to expire in 2010 and introduce a two-tiered flat tax. Thompson's plan would call for a 10 percent tax rate for joint filers with incomes of up to $100,000 ($50,000 for singles) and a 25 percent rate for those with higher incomes; it would simplify the tax code by reducing the deductions and credits available.

Thompson also spelled out that he favors repealing the death tax (or if you prefer, the estate tax); he also wants to repeal the alternative minimum tax, which everyone seemingly wants to do, though no one can agree on how to go about it. The former "Law and Order" star also proposed lowering the corporate tax rate from the current 35 percent to no more than 27 perent, which could actually increase federal revenues: if the loopholes and the jumble of deductions currently available to corporations were closed as Thompson suggests they should be, corporations might actually end up paying more in taxes than they currently do.

Throwing out suggestions of instituting flat taxes and lower rates for corporations sounds like it should be appealing to conservatives, but as the Washington Post points out, a nonpartisan group found that "major parts of Thompson's plan would cost at least $2.5 trillion more than it brings in over 10 years." When asked about this on the morning talk show circuit yesterday, Thompson simply replied that those estimates were wrong. He said money would be saved by his Social Security plan, in which workers younger than 58 years old would receive less Social Security than they've been promised.

How the plan might actually work may be less important than how it is received. As already noted on PoliticalBase, the Club for Growth applauded Thompson for suggesting to lower corporate tax rates. This sort of response to his plan could be a strong counter to Mike Huckabee's recent surge in Iowa. Huckabee calls himself an "authentic conservative," but if Thompson emphasizes economic issues over social issues, he can bolster Robert Novak's claim that Huckabee is really a "false conservative" and a "high-tax, protectionist advocate of big government."