Mike Pence’s speech yesterday to the Detroit Economic Club was his third major address on national issues in three months. Combined with his speech at Hillsdale College in September and his speech in Iowa in October, Pence has been setting forth proposals that might engage an electorate that wants something more than “hope and change.”
Yesterday Pence proposed a program he labeled “S.T.A.R.T.” — Sound monetary policy, Tax relief and reform, Access to American energy, Regulatory reform, and Trade — with a lengthy discussion of each topic. The section on taxes was a 1,500-word discussion that read in part:
In an upcoming study written by the legendary Dr. Art Laffer, Wayne Winegarden and John Childs, they found the cost of compliance with today’s tax code to be over $540 billion annually and that individuals and businesses spend 7.6 billion hours on their taxes. … The Laffer study predicts that by simplifying the tax code and cutting complexity costs in half, our economy would grow $1.3 trillion more over ten years than if we maintain the status quo. …
There is one system that [provides the necessary revenue without discouraging economic growth and imposing undue compliance burdens] … a flat tax. …
Individuals would pay taxes on their wages or salary after receiving a basic income exemption and an exemption for any dependents, including children and elderly family members and others who you care for in your home. Imagine how easy this would be for people. Gross income minus a generous standard deduction minus any dependent exemptions and you’ve got your taxable income. Apply the rate and your taxes are done. Everyone pays the same rate, and the more money you make, the more you pay. It’s fair, simple and effective.
We’ve heard this proposal before, and figures like $540 billion of compliance costs, 7.6 billion hours on taxes, and $1.3 trillion in projected economic growth deserve the same skepticism that properly greets projections of savings from eliminating “fraud, waste, and abuse” (or from enacting ObamaCare). The estimates are only as good as the assumptions underlying them — many of which are inherently speculative and none of which can be forecast accurately for 10 years (or even a few years). But Pence made the case that the time for a flat tax may be approaching:
A flat tax is in use in more than twenty countries around the world, and they have been proposed and supported by various legislators and economists in America over the past 30 years, such as Robert Hall and Alvin Rabushka, Dick Armey, Steve Forbes, Art Laffer, Jack Kemp and Richard Gephardt. We don’t think about it, but we already use flat taxes in America as taxes for Social Security, Medicare taxes, sales and property taxes. …
If you look back at history, the Kennedy, Reagan and 2001/2003 tax reforms were all followed by strong economic growth. The flat tax goes beyond these tax cuts and provides not just lower taxes but a greatly simplified system.
It is not clear that Pence wants to run for president; some think he plans to run for governor of Indiana (one of the other lessons of “hope and change” is that executive experience is at least as important for the presidency as the ability to give a good speech). He may simply want his ideas in the arena (a commentator who has written frequently about him describes him as fundamentally a man of ideas).
But we should know soon: the presidential race will start in roughly two months, if Barack Obama’s February 2007 presidential announcement is any indication of the lead time that now governs such a race.