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McCain on tax policy

John McCain is taking a somewhat different approach to taxes than his rivals for the Republican nomination. Since he has a history of public skepticism about tax rate cuts, he wouldn't have much credibility if he became a sudden convert to tax-cutting during a Presidential campaign. He will adopt "reform" as his approach in a speech today, as Captain's Quarters reports:

John McCain, looking for some conservative mojo to break out of an early slump on the stump, will outline his plan to overhaul the federal tax code at a speech today in Memphis. Speaking in the heart of what may soon become Fred Territory, McCain will pledge to end the "Byzantine" tax laws that have created an entire industry out of determining how to pay Uncle Sam:

"It won't be easy to fix a Byzantine code that has been decades in the making. But I don't want the office for the sake of the nice house, the big plane, and the car and driver," Mr. McCain plans to say, according to an excerpt of his remarks provided to The New York Sun. "I want to fix the hardest problems, and I'll fight to make the tax code simpler, fairer, flatter, more pro-growth and pro-jobs."

Read the whole post and get the link to the stem article at the link above.

Tax reform is actually a much more fertile ground for conservatives than more marginal rate cuts. We are coming closer to the Law of Diminishing Returns on rate cuts. The stimulative effect on the economy from reducing rates shrinks as the rates themselves shrink, and so does the ability of increased economic activity to "pay for" tax cuts with increased revenues.

There are any number of ways to cut taxes still, but they are less popular than income tax rate cuts because fewer people pay them: capital gains and estate taxes could be eliminated altogether with positive long-term economic effects, but they probably won't be since most of those who pay them are of above average income.

Reform, though, remains undone. The tax code is ridiculous, the rules are ridiculous, the record-keeping and preparation of forms is a drain on the economy for no tangible benefit. Everyone understands this, so it could be an easier sell. It's a good thing McCain is putting the subject back on the table.

Giuliani and Romney shouldn't get left behind on this one. Rudy in particular ought to be out front on the issue after adding Steve "Flat Tax" Forbes to his team. In the meantime, it gives McCain a chance to show leadership on an issue besides the Iraq War (and the War on the First Amendment he calls BFCRA).

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