Why Gingrich’s Tax Plan Beats Romney’s
Newt’s flat tax would do a lot more to attract capital, spur growth and reduce compliance costs.
Jobs and wealth are created by those who are taxed, not by those who do the taxing. Government, by its very nature, doesn’t create resources but redistributes resources. To minimize the damages taxes cause the economy, the best way for government to raise revenue is a broad-based, low-rate flat tax that provides people and businesses with the fewest incentives to avoid or otherwise not report taxable income, and the least number of places where they can escape taxation. On these counts it doesn’t get any better than Mr. Gingrich’s optional 15% flat tax for individuals and his 12.5% flat tax for business. Each of these taxes has been tried and tested and found to be enormously successful.
Hong Kong, where there has been a 15% flat income tax on individuals since 1947, is truly a shining city on the hill and one of the most prosperous cities in history. Ireland’s 12.5% flat business income tax propelled the Emerald Isle out of two and a half centuries of poverty. Mr. Romney’s tax proposals—including eliminating the death tax, reducing the corporate tax rate to 25%, and extending the current tax rates on personal income, interest, dividends and capital gains—would be an improvement over those of President Obama, but they don’t have the boldness or internal integrity of Mr. Gingrich’s personal and business flat taxes.
Imagine what would happen to international capital flows if the U.S. went from the second highest business tax country in the world to one of the lowest. Low taxes along with all of America’s other great attributes would precipitate a flood of new investment in this country as well as a quick repatriation of American funds held abroad. We would create more jobs than you could shake a stick at. And those jobs would be productive jobs, not make-work jobs like so many of Mr. Obama’s stimulus jobs.
Tax codes, in order to work well, require widespread voluntary compliance from taxpayers. And for taxpayers to voluntarily comply with a tax code they have to believe that it is both fair and efficient.
Fairness in taxation means that people and businesses in like circumstances have similar tax burdens. A flat tax, whether on business or individuals, achieves fairness in spades. A person who makes 10 times as much as another person should pay 10 times more in taxes. It is also patently obvious that it is unfair to tax some people’s income twice, three times or more after it has been earned, as is the case with the death tax.
The current administration’s notion of fairness—taxing high-income earners at high rates and not taxing other income earners at all—is totally unfair. It is also anathema to prosperity and ultimately leads to the situation we have in our nation today.
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At least Newt is on the right track, as his plan is far superior to Romney’s as well as the idiotic one we have in place now, which is broken beyond all hope of repair.
The problem I have with a flat tax (aside from my derision at federal income taxes of any kind) is that congress will probably start screwing with it right out of the box, just like they did back in the mid 1980s, and before you know it we will be right back in the same boat a few years down the road.
A flat tax also leaves the hideous IRS intact, and as I see it, the goal of all freedom-loving true conservatives should be the total elimination of that most tyrannical of government agencies.
But there is a plan out there that is far and away better than either Romney’s or Newt’s.
It is called the Fair Tax, which not only does away with federal income taxes entirely, but will ultimately rid us of the IRS.
Now if we could just get Newt on board.