A fight appears to be brewing between Texas Gov. Rick Perry and former Massachusetts governor Mitt Romney over tax policy.
On Wednesday, Perry declared that he would be coming out with a flat-tax plan next week. In Iowa Thursday morning, Romney said the flat tax has “positive features” but you have to make sure it “doesn't raise taxes on middle-income Americans.”
Romney has frequently praised the flat tax — in theory. But the specific plans offered by Republicans, he has argued, are unfairly weighted towards the wealthy.
While Romney has moved to the ideological right on most issues, his stance on this one is pretty consistent. But he’s also trying to have it both ways by embracing theoretical idea of a flat tax, which is popular among conservatives, while arguing against a specific plan that, it just so happens, is being pushed by his main rival for the GOP presidential nomination.
As we wrote yesterday, a flat tax would likely hit the poor and middle-class while saving money for the rich.
In 1996 — shortly after losing a Senate race to Ted Kennedy — Romney spent $50,000 on full-page ads in Boston, Iowa and New Hampshire newspapers to oppose the flat-tax proposed by businessman Steve Forbes. “The Forbes Tax isn’t a FLAT TAX at all — It’s a TAX CUT for FAT CATS!” the ad declared.
Romney’s complaint with the Forbes flat tax proposal was that it did not tax dividends interest and investment profits — so millionaires and billionaires whose income came entirely from that revenue would see zero taxes. In his 1994 Senate campaign, Romney said he was open to a flat tax as long as it taxed investment income as well as wages.
In 2007, he again suggested that the Forbes’ idea was unfair, saying: “There are people who talk about the flat tax, but one person’s flat tax is another person’s unfair tax depending on which type of income gets taxed.”
In Nashua, New Hampshire this year, Romney did say “I love a flat tax,” but he went on to argue against the Forbes-style flat tax.
“There are some tax proposals that are called a flat tax that I don’t agree with, because it ends up being a huge tax break for the highest-income Americans, of which I happened to have been one. Still am,” he said. “And I’m not looking for a tax break for me but I want to make sure that we keep taxes as low as possible for middle-income Americans.”
Around the same time, at another New Hampshire event, Romney said he would bring down taxes and said “the idea of one bracket alone would be even better in some respects.” But again he added: “I want to make sure of this — that we’re not going to cut taxes for the wealthiest one percent. ... I’m not for tax cuts for the rich. The rich can take care of themselves.”
Romney’s 59-point economic plan includes multiple tax breaks for the wealthy. He would extend all the Bush tax cuts, cut the corporate tax rate by about a third and eliminate the estate tax — all policies that benefit wealthier Americans.
“Mitt Romney’s stated concern for the middle class is a fundamental misrepresentation of his actual policies,” said Bill Burton — a former White House spokesman and now a strategist for the super PAC Priorities USA — in a statement today. “Romney, in fact, supports the Republican tax policy where cops, teachers and construction workers are taxed at a much higher rate than millionaires like himself.”
On the other hand, Romney would also eliminate capital gains taxes only for those making $200,000 or less — even though the tax mostly affects the highest-income taxpayers.
There hasn’t been much reputable polling on the flat tax recently. Polls from 2005 and earlier find opposition running slightly higher than support — with more than a third of respondents not knowing enough to say. In 1996 and 2005, New York Times polls showed a majority of people thought the idea favored the rich.
Forbes, meanwhile, says he’s been helping Perry’s team with the flat tax, calling it “a labor of love.”
Romney could easily argue that his plan stands a better chance of actually passing — and still does plenty to help the rich. But Perry is clearly hoping to make up ground on Romney by using the simplicity of the flat tax idea to paint himself as bold reformer in the race.