Tuesday, January 17, 2012

Jon Huntsman and the GOP

Yesterday Former Utah Governor Jon Huntsman dropped out of the race for the GOP nomination.   In one sense that is not very important - the Governor never really caught on with a large portion of the GOP.   In another his withdrawal makes the nomination of former Governor Romney all the more likely.

But there are at least two reasons why his announcement was very important.   First, while nothing is inevitable in politics, the winnowing of the field of candidates will shine even more harsh light on the also-rans like Gingrich and Perry.  And it should.   There is a subtle divide between the positive effects that the primary race has had on the front-runner (Romney is a better candidate now than when he started) and the negative effects that continued shots could have on the fall campaign.  All of the Super-Pac money that is being spent now to develop snappy videos will be re-broadcast like political acid reflux by the Obama campaign.  In one sense it gives Romney a chance to try out themes but in the other Gingrich and Perry are just adding ammo to the other side.

The second is more subtle.   A major issue in this campaign should be tax policy.   Since 1986 our tax system has grown fat with preferences and complexities.   From my perspective Huntsman had a better tax plan than any other GOP candidate.   (While I do not agree with every part of the plan - it is very strong in its consistency and general direction.)   His plan would have lowered rates by eliminating deductions and credits; eliminated the Alternative Minimum Tax; Reduced the corporate rate by ten points - to 25% (to bring us more in line with other developed countries); introduced a territorial system of taxation which when coupled with his proposal to implement a tax holiday for repatriating capital back to the US would have simplified the business taxation for multi-nationals; and finally he would have reduced taxation on capital gains and dividends to zero.

Romney's plan looks a lot more like a committee document.  He would maintain current rates for both individual taxes and capital gains, interest and dividends.  And would eliminate those taxes for people under $200,000 income.   He would eliminate the "death tax."  Finally he would do the same shift from worldwide to territorial taxes for multinationals.   The three major differences between the plans are the elimination of inheritance taxes (Romney) and the carve out for incomes below $200,000 for interest, capital gains and dividends and Romney's plan does not attempt to dethatch the code (which is in sore need of cleanup).   Let's hope after the primary contests are over that Romney at least looks at the good ideas of another candidate.

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