from the OpinionJournal.com

Give Tax Filers the Freedom to Choose

Voters want change, but Republicans seem bereft of new ideas. That’s why a tax restructuring proposal by Reps. Paul Ryan of Wisconsin and Jeb Hensarling of Texas suddenly seems to be gaining support on Capitol Hill.

Called “The Taxpayer Choice Act,” the bill provides a GOP counterproposal to Democratic House Ways and Means Chairman Charlie Rangel’s trillion-dollar tax hike, itself offered as a solution to the runaway alternative minimum tax. As Mr. Ryan tells me, “We can’t beat something with nothing, which is why we introduced the Choice Act.”

It works like this: The AMT would be repealed, protecting 20 million middle-class Americans from paying it next year. An optional postcard tax return would be created with two rates: 10% on income up to $100,000 and 25% on income above. The first $40,000 of income for a family would be tax free, but most deductions would be eliminated.

Presto. This solves the political problem of most flat-tax proposals — the reluctance of voters to give up tax deductions they savor. Filers would have a choice of the postcard return or continuing to comply with the current code, and would be expected to figure out over time that they are better off with a flatter, simpler tax return. The plan is winning accolades from people like Jack Kemp, Steve Forbes, and Bob Novak.

One big virtue of the Taxpayer Choice Act, which was first suggested on the pages of the Wall Street Journal in the mid 1990s, is that it provides a mechanism to hold federal taxes steady as a share of the economy at their historical rate of between 18% and 19%. The plan would slam the brakes on a series of tax hikes baked in the cake of the current tax code. The first of these is the AMT, which will hit 30 million filers by 2010. The second is the expiration of the Bush tax cuts. Under current law, taxes as a share of GDP would go to nearly 23% by 2040. Democrats, if they win everything in November 2008, wouldn’t have to legislate new taxes — the biggest tax hikes in history are already on automatic pilot. How convenient for Hillary.

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