My commentary on Fred’s tax plan will be quite short indeed. I mostly like what he’s proposing if compared to our current tax code, and I would pull that lever in a second if these were the only two choices available to me. However, I also feel that there is a better alternative available than what he’s proposing.

The basics, from the Fred ‘08 website:

Tax Reform

The U.S. tax code is broken and a burden on U.S. taxpayers and businesses, large and small. Today?s tax code is particularly hostile to savings and investment, and it shows. To make matters worse, its complexity is a drag on our productivity and economic growth. Moreover, taxpayers spend billions of dollars and untold hours each year filling out complicated tax returns, just so they can send more money to Washington, much of it for wasteful programs and the pet projects of special interests. We need lower taxes, and we need to let taxpayers keep more of their hard-earned dollars?they know best where and how to spend them. And we need to make the system simpler and fairer for all. To ensure America?s long term prosperity and economic security, I am committed to:

* Fundamental tax reform built on the principles of simplicity, fairness, and growth.
* A new tax code that gets the government out of our citizens? pocketbooks, while enhancing U.S. competitiveness abroad.
* Dissolution of the IRS as we know it.

To be a little more specific:

Key aspects of Thompson’s tax proposal:

–The choice of filing under the current system or a flat tax rate of 10 percent for joint filers with an income of up to $100,000 — $50,000 for single taxpayers; and 25 percent on income above these amounts.

The standard deduction would be more than doubled to $25,000 for joint filers and $12,500 for singles. The personal exemption would be increased to $3,500. A family of four would be exempt from income tax on the first $39,000. The simplified code would contain no other tax credits or deductions, and retain the 15 percent tax rate on capital gains and dividends.

–Preserving the $1000 child tax credit, which was doubled from $500 per child.

–Protecting marriage penalty relief.

–Retaining education tax incentives, including Coverdell Education Savings Accounts, 529 college savings plans, and deductions for higher education expenses.

–Permanently repealing the estate tax.

–Eventually repealing the Alternative Minimum Tax, a separate system created 30 years ago to ensure that a few high income Americans could not use deductions and credits to eliminate their tax liability.

Thompson also would index the exemptions annually so that millions of middle-class families would not be subject to the tax.

House Democrats earlier this month pushed through an $80 billion bill to block the spread of the tax. The White House and Republicans, protesting tax increases in the bill affecting mainly investment fund managers, maintained that it would never become law. Bush supports relief from the tax, but promised to veto any bill that raises taxes as a condition of fixing the AMT.

–Reduce the top corporate tax rate from 35 percent to no more than 27 percent.

–Permanently extend small business expensing of equipment and other small business items.

–Update and simplify depreciation schedules.

It seems like he’s coming from the right place at least - a desire to streamline and clean up the ponderous tax code. If he’s the man to work with a possible continued democrat majority in the legislature to make these reforms a reality, then it’s a step in the right direction. At the same time, however, I do not feel this is the best possible reform package. Partly because it retains some of the arbitrary progressiveness of the current tax code - he’s merely reducing the number of tax increments. And partly because it’s just not the fair tax (consumption tax) which candidate Mike Huckabee, for example, has voiced support for. I’ll let Alexander Hamilton explain one of the advantages of the fair tax:

It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess. They prescribe their own limit, which cannot be exceeded without defeating the end proposed—that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty that, “in political arithmetic, two and two do not always make four.” If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them. -Alexander Hamilton, Federalist Paper No. 21.

Also refer to the fair tax.

The government will never be out of our pocketbooks as long as we need to prove up our income and expenditures to the IRS every year.

Finally, if I were Fred, I would make one addition. A third choice of tax system, where rich liberals can volunteer to pay anywhere from 50% to 95% of their incomes to the federal government. Give the people what they want. There is no shortage of snobbish liberal gazillonaires demanding the opportunity to pay their “fair share”. Any reformed tax code failing to accommodate their wishes would be woefully deficient.

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