Continuing The Tax Debate

A few days ago I blogged about the tax reform debate our country needs.

Speaker Newt Gingrich has placed within his 21st Century Contract with America what I think is probably a better version of the flat tax program Governor Perry has proposed, and I think Speaker Gingrich's explanation is concise and easily understood. Read it below, let me know what you think.

JOBS AND PROSPERITY PLAN: TAX SIMPLIFICATION WITH AN OPTIONAL FLAT TAX

My legislation will also include an optional flat tax of 15% or less. All tax filers would be given the option to pay their income taxes subject to current income tax provisions or to pay under a lower single rate of taxation with limited deductions. A revenue neutral flat tax reform would save hundreds of billions of dollars in compliance costs each year and would eliminate the need for taxes on savings, dividends, and capital gains.

This optional flat tax system will create a new personal deduction of $12,000 for every American. This deduction is well above the current poverty level, ensuring that this new system does not unfairly target the poor. The current $1,000 tax credit for each child aged sixteen or younger would also apply, as would the current earned income tax credit (EITC).

An optional flat tax reform will be simple: tax returns can be done on one sheet of paper. Subtract from income a standard deduction and deductions for charity and home ownership, multiply the result by the fixed single rate of taxation of at most 15%, and the process is over.

Gone will be the stressful hours spent figuring out whether your military service or marital status will adversely affect your return. No more headaches trying to determine where estimated tax payments go. Tax preparation fees could be money spent on something more rewarding.

Such an optional flat tax system would create a new standard deduction, which would be above the established poverty level, meaning an optional flat tax would not unfairly target the poor.
An optional flat tax would eliminate the Alternative Minimum Tax. And if a person had twice as much income as another, he or she would be taxed twice as much. Furthermore, a single rate tax structure would eliminate taxes on savings, capital gains, and dividends. Saving would increase and businesses would expand to create new jobs.

This concept of an optional flat tax would give American taxpayers an opportunity to choose simplicity versus complexity and a single rate over a lot of deductions.

Because the flat tax is optional, it does not raise taxes on a single person or unfairly impact seniors, lower income workers, or the poor.

Must Read Article About The Flat Tax

Flat-Tax Fever Grips GOP

Supply-side economists, naturally, are delighted by the GOP’s newfound commitment to pushing the flat-tax, which gets rid of loopholes and offers a rate that remains consistent regardless of income for taxpayers above the poverty level.

A broader tax base helps lower rates. Supply-siders say that would reduce the incentive to manipulate the system while substantially reducing the estimated $480 billion that Americans spend each year to comply with the tax code. The result, they predict, would be an economic boom. 

“There’s not one of the candidates we have running in this primary who would not change the tax codes dramatically in this direction,” Dr. Arthur B. Laffer, widely considered the father of supply-side economics, tells Newsmax. “And that makes me very proud of the Republican candidate base, to be honest with you. 

“And I’m ashamed of the Democrats,” Laffer says, “because they used to be the party that opposed the Republican naysayers, the Barry Goldwaters and Bob Doles, who never saw a tax increase they didn’t love … Now, the Democrats have gone to the dark side, and we’ve got to bring them back!”

The Tax Debate Our Country Needs

With Chairman Mao, or uh, Obama in charge on the nation, we can expect little in the way of positive tax reform that would relieve the burden on the American population.

Enter the Republican Presidential candidates.  There are many good ideas on the table, and most of them reform the current system.  If we continue to just tinker with the current system, we will continue to get nowhere.  Herman Cain, Newt Gingrich, even Jon Huntsman, and now Rick Perry have offered attempts to change the tax system.

The Wall Street Journal has written this piece called The Flat-Tax Sweepstakes.  The column is a good read, but here are three paragraphs that make the case:

Rick Perry joined the GOP's tax reform sweepstakes on Tuesday, proposing an optional flat income tax of 20%, among other fiscal and economic reforms. We'll get to the details, but the larger story is how the drive for a flatter, simpler, more pro-growth tax code is taking center stage in the Republican Presidential contest.

Mr. Perry joins Newt Gingrich, who has proposed a 15% optional flat tax; Jon Huntsman, whose reform proposal would cut the top individual rate to 23%; and Herman Cain and his now famous 9-9-9 plan. House Republicans included a reform with a 25% top rate in their budget earlier this year. All of this ferment shows that whatever one thinks of the candidates as potential Presidents, most of them are trying to meet the political moment with reforms to address our major economic challenges.

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The good news is that Mr. Perry and most of his competitors are thinking big, with proposals that will reverse the U.S. slide to high-debt, slow-growth stagnation. President Obama wants to portray the economic debate as pro-growth government spenders vs. the austerity of budget cutting. But the real debate is over whether government or the private economy is the main engine of prosperity. The flat tax puts Republicans on the side of private growth and government reform, a potent combination. Perhaps Mr. Perry and his comrades can even coax Mitt Romney to join the party.

Barack Hussein Obama's Wife In 2012 Campaign Mode

Taken from Drudge Report.  As you can see, Michelle Obama poses for a picture pretending like she's a normal person.

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