The flat tax is becoming a litmus test for Republican presidential candidates, and on Tuesday it won a key endorsement from the former chairman of the Republican Governors Association.
At an event sponsored by the American Action Forum, at the National Press Club in Washington, Mississippi Gov. Haley Barbour argued in favor of key elements of Rick Perry’s freshly released budget plan, which includes the option of a single income and corporate tax rate, unspecified spending cuts, a spending cap, and private savings accounts for workers as an alternative to Social Security.
“Is a flat tax good tax policy? Yes. It’s not the only good tax policy. But it’s certainly can be very good tax policy, particularly if you eliminate a lot of deductions so that it increases the appropriate amount of revenue,” Barbour said.
Barbour noted he hadn’t reviewed Perry’s plan, but seemed enthusiastic about individual elements of it.
“In my lifetime, the closest we came to a flat tax was the ’86 tax bill….we came out with two rates: 15 percent and 28 percent,” Barbour noted. “And it was enormously successful economically. I think the way that it’s been perverted and added on to, so now that it’s gone from two rates to five or six and the President wants to do more has been negative for the economy, not positive. And I think if we could go back to two rates, that would be a step in the right direction and the flat tax is a further step.”
The additional tax brackets, it should be noted, were part of the code during the economic boom in the late 1990s under President Clinton.
On Social Security, Barbour suggested a Perry-like plan would be feasible.
“In terms of Social Security reform, I can make the argument for private accounts,” Barbour said. “Clearly you look at places like Singapore, Australia, where they have required savings — that’s their form of Social Security, that you’re required to save so much of whatever your earnings, and the government takes it and invests it so you can’t spend it. … It would not be unusual in the world for a government to require people or to allow people to save the tax benefits in lieu of some other program.”
Barbour, who believes mandated health insurance is unconstitutional later clarified that he’d back a voluntary program in response to a question from TPM.
