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Washington • As Utah's governor, Jon Huntsman overhauled the state's tax code — leading to the biggest tax cut in state history — and now says if elected president, he'd like to do the same with the federal government.
Huntsman unveiled plans Wednesday for wholesale tax reform with three tax brackets — 8 percent for the lowest earners, 14 percent for the middle and 23 percent for the richest — as well as remove all deductions, loopholes and tax benefits, including deductions for a home mortgage.
"Over the last few decades, our tax code has devolved into a maze of special interest carve-outs, loopholes and temporary provisions that cost taxpayers more than $400 billion a year to comply with," Huntsman said at the Gilchrist Metal Fabricating in Hudson, N.H. "Rather than tinker around the edges of a broken system, I'm going to drop a plan on the front steps of the Capitol that says, 'We need to clean house.'"
Huntsman also pitched:
• Dropping the corporate tax rate from 35 percent to 25 percent;
• Eliminating capital gains and dividend taxes;
• Reducing financial, environmental and labor regulations on corporations;
• And fast-tracking free-trade agreements with South Korea, Colombia and Panama.
Huntsman, who was trying to get out in front of a planned speech on job creation next week by President Barack Obama, also leveled attacks at Obama — his administration "dithered" on job growth — and his rivals in the GOP field whom he said wanted the country to default on its obligations.
"The president believes that we can tax and spend and regulate our way to prosperity," Huntsman said, standing in front of large manufacturing equipment. "We cannot. We must compete our way to prosperity."
Huntsman also pushed for weaning the nation off foreign oil, saying that the government needs to have emission standards that allow natural gas-fueled vehicles.
Critics quickly painted Huntsman's proposal as radical and damaging to America's middle and lower classes.
"The idea that we would eliminate all tax breaks, I think, is completely unrealistic, and if you actually think through the consequences there are some really harsh ones," says Seth Hanlon, director of fiscal reform at the left-leaning Center for American Progress Action Fund.
For example, Hanlon says, tossing out all deductions would mean seniors would have to pay taxes on Social Security benefits as would veterans on disability payments.
Democrats also pointed to the former Utah governor's family-owned Huntsman Corp., which now has a majority of employees overseas. Of the company's 12,000 employees, BusinessWeek recently reported, only 2,174 are in the United States while some 1,100 are in China.
"Desperately flailing to gain any type of traction in the race, Jon Huntsman is out today pushing 'Made In America.' But with him, it is 'Made in China' that has made him millions," says Ty Matsdorf, a spokesman for the liberal group, American Bridge 21st Century. "This appears to be just one more desperate attempt to breathe some much needed life into a floundering campaign."
As governor, Huntsman oversaw a reform of the state's tax system that dropped several levels of tax rates down to a single-rate of 5 percent. Deductions for children, mortgage interest and charitable giving remain in the tax code. The LDS Church, whose membership include more than 60 percent of the residents of Utah, lobbied for retention of the charitable deduction.
The reform resulted in a $225 million overall tax decrease, the largest one-time cut in the state's history.