Pawlenty (left), Gingrich, Cain and Daniels have all floated exotic proposals. | AP Photos Embracing unorthodox tax plans

In this Republican primary season, no economic or monetary policy is too unorthodox for an electorate hungry for change.

The Republican field is filled with potential candidates who have called for radical overhauls of the tax code, the abolition of the IRS, an end to the Federal Reserve central bank— and even a return to the gold standard.


“Part of it is the very high level of unhappiness about taxation,” said longtime tax reform advocate and Americans for Tax Reform president Grover Norquist. “And therefore people are looking for radical changes.”

Flirtation with deeply unorthodox economic policy is usually confined to the libertarian fringes of the Republican presidential fields (read: Ron Paul), but has increasingly bled into the mainstream. Only former Massachusetts Gov. Mitt Romney represents the old-fashioned pro-business Republicanism of previous decades.

In one particularly striking recent moment, former Minnesota Gov. Tim Pawlenty railed against “fiat currency” in a recent appearance on Fox — a signal to a narrow constituency of voters who believe that America’s woes began when it abandoned the gold standard in the 1930s. He also has gone on the record supporting a flat tax — a single-rate income tax that would eliminate the bracket system. The single tax rate for all is a simple concept but would probably involve wiping out the current tax code — including many popular deductions and credits — just to generate enough revenue.

“I support a flatter tax rate. I don’t know if we can get to a flat tax in one leap, but moving in a flatter, more transparent direction, absolutely,” Pawlenty said on Larry Kudlow’s CNBC show in March.

And he’s not alone. Newt Gingrich has proposed an optional flat tax of 15 percent. Indiana Gov. Mitch Daniels called for a value-added national sales tax paired with a flat tax. (Jon Huntsman passed a flat tax as governor of Utah, but hasn’t articulated a national platform.) And Paul wants no income or sales taxes at all, envisioning a government funded with tariffs, highway fees and excise taxes.

Further into the field, the plans get more exotic.

Herman Cain has backed the ‘Fair Tax’ plan, a proposal with a small, well-organized and vocal constituency, which would impose a national sales tax of just under 25 percent and abolish the income tax system. He has also backed a possible return to the gold standard — but only after we “significantly pay down our national debt, stabilize and grow our economy,” spokeswoman Ellen Carmichael told POLITICO.

Other mainstream figures in the Republican Party — including Pawlenty and Indiana Rep. Mike Pence — have flirted with monetary theories like the gold standard or fixing the U.S. currency to a commodities basket.

Often these proposals are aimed at narrow constituencies within the Republican electorate. Mike Huckabee’s support for the Fair Tax in 2008 generated significant enthusiasm for him in Iowa and other primary states.

“In a divided field, a little bit of intense support can go a long way,” said Bruce Bartlett, a former Treasury official under George H.W. Bush who has been a sharp critic of Republican economic policy. “I do know that the Fair Tax people have bodies on the ground who will work passionately for their candidate. Huckabee was their guy — others are now trying to try to pick up that mantle.”

And Ron Paul’s 2008 campaign showed that there’s a narrow slice of the Republican electorate that’s stridently anti-Federal Reserve and deeply concerned about inflation.

Norquist told POLITICO that Pawlenty’s ‘fiat currency’ line was “a dog whistle for all Ron Paul supporters.”

“It’s a way of saying ‘I hear you, I get it’,” he said.

But in a country that’s had a progressive income tax for almost a century, proposals like a steep national sales tax, a value-added tax or a single rate might prove unpopular. Many economists and political commentators take a dim view of the kind of sweeping monetary policy and tax policy changes proposed by many in the 2012 field — both in policy terms and political achievability.

“Both the fair tax and the flat tax are examples of what Einstein said — every problem has a solution that’s ‘neat, plausible and wrong,’” said Holley Ulbrich, a senior fellow at the nonpartisan Strom Thurmond Institute. “The devil is in the details: can you simplify and still generate a lot of revenue?”

“It seems doubtful that the Fair Tax is actually a viable alternative to the current system,” said Bill Gale, a Brookings Institution economist, who cited the difficulty of enforcing such a high sales tax rate and the ease of cheating the system.

“The flat tax is probably more enforceable,” he said. “It’s a radical change from the current system — I don’t say that being good or bad, just that people would have to decide that they want a radical change.”

And there’s even less patience among professional analysts for calls to radically overhaul the Federal Reserve or radically restructure the country’s monetary policy.

“Fiscal policy, I can see how we might want to have a broader debate. With monetary policy, it’s harder to see that,” said Mark Zandi, chief economist of Moody’s Analytics. “The strong consensus view is that the Fed has done a very good job — that it was put in a very difficult position.”

“I think there’s less sympathy for the argument that Federal Reserve needs a significant overhaul,” said Zandi.

And ultimately, the politics of imposing radical tax proposals can backfire — even if they’re appealing in a Republican primary.

Sen. Jim DeMint (R-S.C.), a supporter of the Fair Tax, faced attacks in his own state for supporting what Democrats cast as a massive sales tax increase. Gleeful Democrats simply neglected to mention that DeMint’s proposed policy would have also abolished the IRS. Similar attacks on Fair Tax candidates have occurred in other races. And this cycle, Herman Cain has already faced a similar tough questioning about his support for the Fair Tax in the most recent GOP presidential debate.

“According to the experts, the practical effect of a Fair Tax would be a tax cut for the wealthy and a tax increase for the middle class,” Fox’s Chris Wallace pointed out.

“Your experts are dead wrong — because I have studied the Fair Tax for a long time,” said Cain to loud audience applause.