Giuliani Targets Conservatives With Tax-Cut Plan - WSJ.com - Sent Using Google Toolbar

Giuliani Targets Conservatives With Tax-Cut Plan - WSJ.com

Giuliani Targets
With Tax-Cut Plan

January 10, 2008; Page A8

(See Corrections & Amplifications item below.)

WASHINGTON -- Republican presidential candidate Rudy Giuliani made a bid for his party's tax-cutting wing, unveiling a plan to trim capital-gains rates and simplify the tax code.

Mr. Giuliani proposed many ideas common among the Republican candidates: extending the 2001 and 2003 tax cuts, repealing the estate tax, and eventually eliminating the alternative-minimum tax for individuals. He also backed reducing the corporate-tax rate to 25% from 35% and dropping the capital-gains rate to 10% from 15%.

In a move to appeal to Republican primary voters frustrated with the complexity of the tax system, Mr. Giuliani proposed giving filers an option of filling out a one-page income-tax form, coupled with three tax brackets with rates of 10%, 15% and 30%. He called it the "Fair and Simple Tax" form, or FAST.

The former New York mayor cast his tax plan as an effort to stimulate the economy and encourage businesses to keep hiring workers as many voters are reporting economic security at the top of their lists of concerns.

[Rudy Giuliani]

"At a time when many Americans are worried about the economy, now is the right time to cut taxes so we can put America back on a pro-growth path," Mr. Giuliani said.

His plan had a more conservative tinge than might have been expected from a candidate who has been focused on attracting the center of his party. His campaign, now focused on winning the Jan. 29 Florida primary, put out a statement calling him the "real fiscal conservative running for president."

Among the Republican candidates' plans, Mr. Giuliani's appeared most similar to that of Fred Thompson, who has been a favorite of conservatives but is lagging behind in the polls. The conservative Club for Growth praised both candidates' plans. Both Messrs. Giuliani and Thompson proposed voluntary, simplified methods for individuals to file their taxes.

Mr. Giuliani's plan is "exactly the kind of plan economic conservatives should embrace," Club for Growth President Pat Toomey said. He said the proposal would "reward hard work, encourage investment and promote economic growth for Americans across the economic spectrum."

The antitax group Americans for Tax Reform also praised the Giuliani plan.

Mr. Thompson's proposal would go further than Mr. Giuliani's. The former Tennessee senator proposed a flat tax with two rates. He also would eliminate the deductions and credits in the tax code. Mr. Giuliani would retain deductions for mortgage interest, charity, and state and local taxes, among others.

Mike Huckabee has proposed a far different approach: scrapping the income tax and replacing it with a national sales tax. The Club for Growth has been hammering Mr. Huckabee over the proposal, which critics say is unworkable and unlikely to get through Congress. But the former Arkansas governor's plan turned out to be a strong attraction for Republican voters in Iowa, where he won the caucuses with his populist message.

Former Massachusetts Gov. Mitt Romney also has proposed extending the 2001 and 2003 tax cuts and repealing the estate tax. He put forward a unique proposal among the candidates: to eliminate taxes on capital gains and dividends for people earning less than $200,000.

Arizona Sen. John McCain has been criticized by some on the right for opposing past tax cuts promoted by President Bush, which he has said he did only because the lost revenue wasn't offset with spending cuts. Mr. McCain backs extension of the 2001 and 2003 tax cuts, with spending cuts as offsets. He supports eliminating the alternative-minimum tax and reducing corporate rates.

If the Republicans' tax proposals have substantial common ground, they present a contrast to the approach of Democratic candidates. The theme among the Democratic front-runners has been directing tax cuts at lower- and middle-income people, and paying for them by increasing taxes on wealthier people. They have said that at least some of the 2001 and 2003 tax cuts should be allowed to expire, as scheduled, in 2010.

Write to Sarah Lueck at sarah.lueck@wsj.com

Corrections & Amplifications:

The Club for Growth hasn't taken a position on the substance of Mike Huckabee's "fair tax" proposal, instead focusing its criticism on his tax record while governor of Arkansas. This article incorrectly said the Club for Growth has been critical of Mr. Huckabee's proposal.