Jennifer, it sounds like a solid pro-growth tax plan on the merits, but I wonder if parts of it will prove politically popular beyond the Republican base. Aside from keeping the bottom tax rate at 10 percent, it is fairly easy to caricature as skewed to the wealthy. I’m also interested in how he proposes paying for AMT repeal, even over the long haul.
Republicans find themselves in a bit of a bind. They can cut tax rates that will have big revenue reflows, like the capital gains tax cut, and be attacked for their fealty to the rich (or worse, ignored by a large number of voters who won’t see their taxes cut). Or they can pass broader tax cuts and lose revenue for government programs they would rather not cut. Traditionally, Republicans have offered across-the-board tax cuts. Aside from preventing an across-the-board tax increase if the Bush tax cuts were to expire, this doesn’t seem to offer one. But the GOP is starting to bump up against the limits of how much across-the-board tax-cutting they can do without cutting government too.
I’m not against any of the provisions of the Giuliani tax plan. They all sound good to me. But I’m not sure they offer us a way out of that bind.
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