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.

Newt Now

Stimulus 2.0

This column originally appeared at US Daily Review.

As I mentioned here on US Daily Review last week in my column titled "Avoiding The "S" Word", Stimulus II, the son of the first stimulus disaster was indeed presented Monday by the current President. The so-called American Jobs Act is more of the same. This is not surprising from a failed President, and a man who had never created a job or balanced a budget prior to or during his reign as President, unless it was with taxpayer dollars.

What the current President has done is created a plan that would take money from the people, and from the "big, bad evil" corporations, and put it toward government jobs. The current President has chosen to increase taxes on business and close so-called loopholes, rather that freeing up much needed capital so that American businesses can build bigger and hire more. I understand the President not wanting to go with the latter plan, that would not create enough votes for his re-election campaign. A plan where he creates government jobs and takes money from the business community, well that helps with his anti-capitalist base.

View this chart and see for yourself:



In Tuesday's Wall Street Journal, House Majority Leader Eric Cantor had this to say about the current President's plan, "Anything that is akin to a stimulus bill is not going to be acceptable," he said. "Over half of the total dollar amount is so called stimulus spending. We have been there, done that. The country cannot afford more spending like a stimulus bill."

As I have suggested before, if the current President were serious about job creation, the first two things he would do to address the high unemployment rate would be to reduce job-killing regulations and cut job-killing tax rates. Instead, the current President opts for more job-killing regulations, more job-killing tax increases and more government spending.

When the current President gave his campaign speech during a joint session of congress last week, he kept repeating, "pass this bill right away". This was an obvious attempt to show leadership from a President who has not been able to do so in any other way after 32 leaderless months in office. His bill that he wanted passed right away, is more of the same, as Majority Leader Cantor said, it is more of the same, it is more of what has already failed.

The Wall Street Journal also pointed out today, "The White House says the tax changes would take effect in 2013 and estimates they would raise $467 billion in additional revenue over 10 years."  So if you are one of the many unemployed Americans, don't worry, Obama's so-called jobs plan will be put into effect in just 15 short months, be sure to go to the current President's website and signup for emails on progress of that "plan".

It was amazing to watch and think during the Republican presidential debate last night, that any one of the people on that stage, will do more for America and job creation as President-Elect in November and December of 2012, than the current President has actually done while in office. We just have to hope that the Hopers and Changers who find themselves unemployed this go-round will be on the side of capitalism and free markets, and not on the side of government funded, government mandated attempts at job creation.

Hopefully Stimulus II is DOA.  It is worth noting that the bill itself is not designed to gain passage. It serves two purposes: It is something the current President can say he presented to congress; and hen congress does not pass the bill as is, the current President has a campaign weapon.

Avoiding The “S” Word

This column originally appeared at US Daily Review.

I saw this piece by The Hill a few days ago. With a headline and that would have made George Orwell giddy, "Pelosi Drops The Word "Stimulus".

The Left, clearly losing their war on jobs and their war on our nation's economy, is trying to repackage the same failed programs and legislation that did not work before.  They are not proposing their usual jobs killing tax increases, this time they are trying to pretend they are watching out for the taxpayers and actually wanting to reduce taxes.

As I witnessed the current President's campaign speech on Thursday night, and as I heard one platitude after another, I realized he was talking about more stimulus, this time without actually calling it stimulus.  The current President was also desperate, his speech came across to me as if he was begging or pleading.  It was a campaign speech afterall, I guess he was pleading for four more years of malaise.

The Wall Street Journal had a staff editorial on Friday, well worth reading in its entirety.  But there was one big takeaway worth staying focused on:

"Mr. Obama spoke last night as if he is a converted tax-cutter, asking Republicans to expand and extend the payroll tax cut that expires in December for one more year. Along with tax credits for certain businesses that hire new employees, he says this will cut unemployment, and no doubt it will lead to some more hiring.

But what happens in 2013 when those tax rates expire and Mr. Obama pledges to hit thousands of those same small businesses with higher tax rates on income, capital gains and dividends? He seems to think businesses operate only in the present and will ignore the tax burdens coming at them down the road. This is the same reasoning that assumed that postponing ObamaCare's tax and regulatory burdens until 2014 would have no effect on business hiring in the meantime."

Shovel ready jobs for infrastructure was a big feature of the current President's campaign speech.  Does the current President not understand that infrastructure jobs is money spent by the government, and where does that money come from?  Yes, the taxpayers. So once again, taxpayers get to foot this bill for infrastructure jobs.  This is a surreal cycle to look at.  The Left thinks this is real job growth.  I know the current President knows all of this, which is why this speech was really nothing; a non-starter.  If the Left really wants to create jobs, why not just have the government hire people to clean beaches, rivers and other waterways?  The government could hire people all day long, all year long to do meaningless jobs (some are called bureaucrats), and call it employment or a "jobs plan".

But what about jobs that last for many years? What about jobs that people turn into careers?  Yes, someone has to dig the ditches. Not all jobs in America will be glorious and lead to riches. Not everyone is looking for those jobs.

One final comment from the Wall Street Journal editorial:

"The larger political subtext of Mr. Obama's speech is that if Congress doesn't pass his plan, he'll then campaign against Republicans as obstructionist. Thus his speech mantra that Congress should "pass it right away." This ignores that Mr. Obama has been the least obstructed President since LBJ in 1965 or FDR in 1933, which is how we got here.

He passed $830 billion in stimulus, $3 billion for cash for clunkers, $30 billion in small business loans, $30 billion for mortgage modification, the GM-Chrysler bailouts, ObamaCare, Dodd-Frank, credit card price controls, Build America Bonds, jobless benefits for a record 99 weeks, and more."

It continues to interest me that after 32 months in office, the current President still doesn't have a plan and he still has not proposed something that reaches across the aisle, yet his speeches proclaim to do both.  I would have more confidence in this temporary President if he had managed a Domino's Pizza or a White Castle at some point in his "career".  I would at least imagine that he had experience hiring and firing, balancing budgets and at least looking at profit and loss statements.  For a guy that hasn't done any of this, the words on the teleprompter being read by a guy with a great education really don't establish confidence in my mind.

Stimulus by any other name is still stimulus; stimulus which doesn't stimulate. The Left can keep avoiding the big bad "S" word; the rest of us can keep pointing to it.  Only in America.