Rudy Giuliani's presidential campaign has been relatively light on new ideas and specifics, at least on the domestic policy side. Well, now he has a mondo tax plan. Here is how the Club for Growth describes it (for the life of me, I could not find it on Giuliani's website):
The Giuliani tax cut plan would extend the 2001 and 2003 tax cuts immediately; eliminate the Death Tax completely; lower the capital gains and dividends tax rate to 10% and index capital gains to inflation; lower the corporate tax rate from 35% to 25%; and permanently index the Alternative Minimum Tax to inflation with a plan for eventual elimination. The Giuliani tax cut plan also contains a particularly bold pro-growth tax simplification strategy that would give taxpayers the option of opting into a simple tax plan in which their taxes could be done on one page. Instead of the current tax behemoth, the voluntary tax plan would constitute across the board cuts in marginal tax rates by proposing three simple rates of 10%, 15%, and 30%.
My take: This plan is a completely over-the-top effort to woo economic conservatives. Indexing capital gains for inflation is the cherry on top, even more so than a flat tax. To a supply-sider, there is no worse tax than the capital gains tax.
One big problem is that budgeteers surely would crunch the numbers and claim the plan would result in $2 trillion to $3 trillion in lost government revenue. Such "static scoring" that does not take into account the economic growth impact of lower taxes may well be bunk. But a big tax cut should probably be accompanied by a big spending cut plan or a plan to reduce entitlement spending. I think the electorate is in a pretty skeptical mood these days.
Now while the John McCain three-yard-and-a-cloud-of-dust tax plan—killing the AMT, extending the R&D tax credit, extending the Bush tax cuts, banning Internet taxes, tweaking budget rules to make it hard to raise taxes—might actually get through a Democratic Congress, Rudy probably deserves a few points for audacity.