Maryland for Fred Thompson

Here’s a portion of Fred’s Fox News Sunday discussion. It’s on taxes and Social Security:

Chris Wallace: Your campaign tells us you have a new tax plan you want to unveil today.

Fred Thompson: Yes, yes.

Chris Wallace: What is it?

Fred Thompson: It’s maintaining the tax cuts that we had in 2001 and 2003, it’s eliminating the death penalty, reducing the corporate tax rate. We have the second highest corporate tax rate among other competing partners. It’s hurting us competitively. We’re probably losing revenue from it. We have several other provisions in it, but another major one is an adoption basically of the approach that the house republican study group has that would give taxpayers an option of continuing to file the way they do now or filing under a flatter plan where you only have two rates, but no exemptions past the personal exemption and no deductions. So give that a try and it would be a major move toward tax reform which I think is greatly needed.

Chris Wallace: One thing you also do is you repeal the alternative minimum tax. Obviously –

Fred Thompson: Eventually.

Chris Wallace: There’s concern about fact that it now because there’s no indexing that middle class families who weren’t supposed to fall under the AMT are being hit, but you’ll get it for rich people as well. Why repeal it for everyone?

Fred Thompson: Well it was a tax that was never supposed to be imposed on anybody except 150 taxpayers and now we’re seeing 23 million taxpayers. At the current rate, the AMT will be collecting more tax revenue than the regular tax system. So what we’re saying is let’s index it from year to year until we get a handle on spending and then we’ll eliminate it. The government wasn’t supposed to get that revenue in the first place, and it will not be the drag on the economy that I think the higher tax — higher taxes would be.

We’re facing after the end of 2010 a situation where a lot of — a lot of revenue under current circumstances is going to fall right into the hands of the government. Taxes are going to be higher without anybody having to do anything. Automatic AMT increase including millions of people who were not originally intended to be covered, income tax rates going up substantially for just about everybody in America, and that’s bad for the economy.

We’ve known for years any time we have lowered taxes, any time we’ve lowered tax rates, we’ve seen growth in the economy. Growth is the fundamental underlying factor that we have to maintain in order to be able to generate the additional tax revenue that we’re going to need in order to be fair to the American people. (Emphasis added)

Chris Wallace: But we’ve also got to pay for our government. we went over your plan yesterday, crunched the numbers, and the best we could figure, it would cut federal revenue by more than $2.5 trillion dollars over the next 10 years, that’s roughly 10% of the government’s budget per year. So how would you cut federal spending to offset this huge revenue loss and be specific?

Fred Thompson: Well, I will be specific. But first I’ll say I hope your estimates are better than the professionals who estimated that we would get so much less in capital gains revenue if we lowered the capital gains rate. They were totally wrong about that. They were wrong as to the amount of tax revenue we would lose under the 2001 tax rate cuts also. They always overestimate the losses to the government. We had one day in April this year, where the government took in more tax revenue than any single day in the history of the country. So that’s always — that’s always missed by the experts.

Chris Wallace: So give us three specifics.

Fred Thompson: Let me give you one big one worth about $1.4 trillion dollars: my social security plan. I have put out a social security plan, the only one among the Democrats or Republican contenders, that basically faces up to the fact that social security is going bankrupt and that we’re going to have to do something about it. The comptroller, every economic expert who’s looked at it says it’s unsustainable. And indeed it is. We’ll be going into the red in 2017 and it gets worse from there.

I’ve put out a proposal to save social security and save money for the government at the same time and allow individuals to set forth 2% of their payroll into a private personal account with the government matching that. And in the long run the government would come out ahead, a person would have a nest egg at the end of his retirement time. And if you do that in conjunction with indexing the initial social security benefit to inflation instead of wages, at the end of the day, you’re going to save social security, you’re going to put it on a sustainable basis. A lot of experts have already looked at it, and I think come to that conclusion. The National Review has reported on it, Investors Business Daily has reported on it, the Washington Post has analyzed it. It will save the government $4.7 trillion dollars at the end of the day. Eventually you have to address the spending side, but the spending is going to have to be addressed on the basis of our entitlement difficulties.