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Phillip Klein of the American Spectator discusses:
I don’t have a link, but the Rudy campaign has issued a response to the flat tax flip flop charge. Basically, the campaign argues that his views have been consistent, because Giuliani’s position on Kudlow the other day was that a flat tax would have been the way to go if we were starting from scratch, but that it’s hard to do so now because the system has already been built around deductions. In 1996, he was arguing against a flat tax because of the immediate impact that the elimination of the state and local tax deduction would have on New York City.
Here’s what he said on Kudlow Monday:
GIULIANI: “I think it needs a massive simplification. If we were doing income tax for the first time, in other words, we were starting off new back at the beginning of the last century, then probably we should go with a–we probably should’ve gone with a flat tax, or maybe two levels of tax, but really simple. Our economy has kind of grown up now on depreciation and deductions and industries have grown up around that, and so I don’t know exactly how much you can simplify it, but you sure have to make a stab at it.”
Here’s what he said on his 3/9/96 “Capital Gang” appearance:
GIULIANI: “No, I think it [flat tax] would be a terrible mistake for urban areas, for big states. We depend on the deductibility of state and local taxation and in a time in which the federal government is turning over more responsibility to state and local governments, which they’re doing, whether it’s the Clinton approach or the Republican approach in the House, really it’s just a question of how fast it’s done, you can’t be pulling away some of our economic basis, which rests with state and local taxation and that would be true of any of the big cities, any of the big states. It would really be a disaster and it’s totally inconsistent with the movement of the Republican Congress toward giving more responsibility to state and local government.“
It is easy to see a discrepancy if the the two statements are not viewed in full context.
March 30th, 2007 at 2:49 pm
First, its obvious its not a flip. I for one am all for a flat tax. I support a flat tax and I would like to see a flat tax. However, I also agree with Rudy that our economy has truly “grown up” around an entrenched system of deductions and therefore, I do not believe Congress will be willing to takes the economic steps necessary to simplify the tax code in such a way. Its a great thing to talk about, its a completely different story to get it rhough a democratic, or Republican for that matter, Congress.
March 30th, 2007 at 3:52 pm
Another victory for context, Kavon. The bulk of the flip-flop charges against Romney, and atleast this one against Rudy, result from the attention-deficit attention span of 7 word sound bites and headlines.
March 30th, 2007 at 5:15 pm
Um, guys, that looks like a huge flip to me. Ten years ago, he said that a flat tax would be a terrible mistake for urban areas. Today, he says the tax code needs massive simplification. What is “massive simplification,” if not a flat tax or something close to it? I’ve rarely, if ever, heard of a flat tax without getting rid of the deduction for state and local taxes, which subsidizes high-tax states at the expense of low-tax ones. Like Romney had to do to get elected in Mass., Guiliani had to spout some center-left or even left-wing rhetoric. Also like Romney, however, Guiliani governed as fiscally conservatively as possible, given the legislative hand he was dealt.
March 30th, 2007 at 5:30 pm
As I understood it, a flat tax concept is the ultimate tax simplification…and given the state of our current tax code, I can imagine quite massive simplifications and streamlinings which still leave intact the tax philosophy and system of deductions to be recognizable.
March 30th, 2007 at 5:50 pm
Yeah there’s pleanty of ways to simplify and streamline the federal tax code without going to a flat tax, which is overly simplistic and is not really the grand plan a lot of people think it is, partly for the reasons Giuliani mentions. The main problem we have with the current tax code is that it is chock full of targeted handouts to different segments of society. In other words, it’s been taken over completely by politicians. Now I know that’s not a big surprise in DC – everything they get their grubby little fingers on falls apart in a dismal failure. I would love to see the next president appoint a couple of business experts to take apart the volumes of tax codes and try to devise a better way to handle it. This should be a bigger issue to the voting public than it seems to be.
March 30th, 2007 at 6:57 pm
Getting rid of the state and local deduction is a hallmark of tax simplification. It has been a standard conservative/Republican tax goal for at least a generation.
March 30th, 2007 at 7:21 pm
I am getting exceptionally tired of the term ‘flip-flop’ being applied to anyone. It has been so overused that it has lost almost all meaning.
March 30th, 2007 at 7:25 pm
Given that the federal tax code is a monument to Washington, D.C. monied special interests, I am looking at these GOP presidential candidates’ interest in tax simplification and the flat tax as a proxy for their willingness to take on such special interests and attack the way business is conducted in our nation’s capital.
Yeah, it will be an uphill and enormous fight because every dog with a deduction under federal law will be against it. But it is a fight worth conducting to move the country forward. So let’s see who has the cajones to bring it on.
March 30th, 2007 at 8:03 pm
Murphy, you are just jealous because that is the one and only count where Romney leads, and it’s in the wrong direction!!!
March 30th, 2007 at 8:12 pm
As to the flat tax, it might be a good thing. It might be a bad thing. I am all for simplification, but human beings just can’t keep from tinkering with things.
To me, the issue is pretty much a snore. It is way down my list of fiscal priorities.
March 31st, 2007 at 12:05 am
The best answer for all of the Federal government’s problems is the FAIR TAX (see http://www.fairtax.org) It eliminates the IRS (saving BILLIONS of DOLLARS). People get to keep their entire paycheck. Businesses and individuals make economic decisions instead of “how will this affect my tax situation” decisions. The FAIR TAX is a simple national sales tax on NEW goods and all services. By broadening the tax base to spending instead of income, the rate can be much lower for all. Enforcement is greatly simplified and so compliance go up.
The only downside I see, is that the federal government would have TOO MUCH MONEY because of the insistence of a revenue neutral rate at inseption. We need to cut spending drastically first.