As you may recall, I was an advocate of the tax credit for home buyers that temporarily boosted the housing market in the first year of the Obama administration, believing then (and still) that we'll never get a real, rip-roaring economic recovery in this country unless housing leads it.  I believed then that, if the tax credit had been left in place for another year, recovery would have been much more robust. Recently, however, I've begun to change my mind on the subject of all forms of government-sponsored economic stimulus.  A recent study by John F. Cogan and John B. Taylor shows that, all the way back to Gerald Ford's time in the White House, temporary stimulus measures just don't work.

Cogan is a senior fellow at the Hoover Institution and a professor of public policy at Stanford University. Taylor is a professor of economics at Stanford and also a senior fellow at the Hoover Institution. They are academics, but not politically neutral. Cogan served as deputy director of the Office of Management and Budget during the Reagan administration. Taylor served as under secretary of the Treasury during the George W. Bush administration.

Still, their research is eye-opening. It shows that Keynesian stimulus packages passed by Congress in 1975, 1976 and 1977 failed to keep the economy out of recession again in 1980. What worked, to the tune of two decades of sustained economic growth, was the permanent income tax reductions and flattening of the tax code initiated by President Reagan in 1981. But when the Great Recession struck in 2007, both Presidents Bush and Obama chose to go back to the well with pump-priming Keynesian stimulus policies. President Obama's $800 billion, targeted stimulus plan took the same approach as President Carter's more than three decades earlier, with the same negligible results.

No wonder, then, that both sides of the aisle in Congress are now beginning to embrace flattening and simplifying the tax code. Democrats see flat as the new fair, a way to assure that "billionaires should pay the same tax rate as janitors," to quote President Obama. Republican Presidential candidates are stumbling all over each other trying to beat Herman Cain's "9-9-9" proposal for flat income and business taxes, combined with a 9 percent national sales tax. They all want to be the next Ronald Reagan.

But builders are wary of a flat income tax system because it threatens the sacred mortgage interest deduction, and even more leary of a national sales tax that would add a hefty tax bill to the price tag of houses as well as cars and all other big-ticket consumer products. Candidates Cain and Rick Perry have both retained the mortgage interest deduction in their flat tax plans.  But I'm not sure builders or NAHB trust Congress on this point.

Personally, I'm now convinced that a flatter, simpler, fairer tax code would do a much better job of jump-starting the economy than any government stimulus measure.  And I've been convinced for many months that all housing needs to reclaim its leadership position in the Great Recovery is for Washington to get out of the way and let it happen.  The way Cain has vaulted to the top of the polls among Republican candidates seems to indicate that I have a lot of company. Tax reform is emerging as the defining issue of the 2012 campaigns for Congress and the White House. Remember that President Reagan's Tax Reform Act of 1986 passed the Senate on a vote of 97 to 3. Who says a flat tax can't be a bipartisan issue?

But what do YOU think?  I'd like to know what others who make their living in the American housing industry think about a flat income tax and a natonal sales tax.  Post a comment here or drop me an e-mail at bill.lurz@avidbuilder.com.