Ken’s Take: A clever move in the direction of a flat tax. Certainly worth considering …
* * * * *
Excerpted from WSJ, “Let’s Have a Real Middle-Class Tax Cut”, Gingrich, Nov. 20, 2008
Obama is right: America needs a real and meaningful middle-class tax cut. Unfortunately, his tax credits won’t stimulate the economy.
Mr. Obama’s tax plan includes creating or expanding nine or more federal income tax credits mostly focused on low- and moderate-income earners, with an estimated cost of $1.3 trillion over 10 years. These tax credits will do little or nothing to promote economic growth because they do not reduce marginal tax rates — the rate on the next dollar of income — to provide powerful, meaningful incentives for productive activities such as investment, entrepreneurship and work.
For a real middle-class tax cut, we should cut the 25% income tax rate that now applies to single workers earning $32,550 to $78,850, and married couples earning $65,100 to $131,450. We should reduce that rate down to the 15% rate paid by workers below these income levels. That would, in effect, establish a flat-rate tax of 15% for close to 90% of American workers.
This 40% cut in middle-class income tax rates would provide a powerful boost to the economy, greatly expanding incentives for savings, investment and work.
We could add to this alternative tax proposal an increase in the personal exemption from $3,500 to $7,000. The package would then cut taxes for all taxpayers, including those in the lower tax brackets.
Because of the highly beneficial effect of these middle-class rate reductions on our economy, and the freedom they would give workers to spend, save or invest their money as they choose, this proposal would likely enjoy broad public support and present a viable alternative to the liberal social purposes of President-elect Obama’s tax credits.
Full op-ed:
http://online.wsj.com/article/SB122714465532443171.html
* * * * *
Want more from the Homa Files?
Click link => The Homa Files Blog
The Homa Files 
Leave a comment