NEWT: Let’s Have a Real Middle-Class Tax Cut

Obama’s tax credits won’t stimulate the economy By NEWT GINGRICH and PETER FERRARA

President-elect Barack Obama is right: America needs a real and meaningful middle-class tax cut. Unfortunately, despite the rhetoric, that is not what his proposals offer.

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 are provided for certain social purposes, such as child care, health care, education, housing and retirement. Buried amid these is Mr. Obama’s purported tax cut for the middle class.

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. A tax credit is effectively a cash grant that can only affect incentives up to the amount of the grant. Indeed, such tax credits would likely reduce economic growth because the credits are phased out as income rises, and so effectively impose higher marginal tax rates over those income levels.

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.

For the bottom 40% of income earners, who pay no federal income taxes on net today, these refundable income tax credits will not reduce tax liability but instead result in new checks from the federal government for the targeted social purposes. That’s not a tax cut. It’s welfare.
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While Newt’s plan is good, he has made a relativistic comparison with Obama’s plan, as if Obama had any interest in providing relief for those that actually pay taxes. He does not. His CLEAR INTEREST is in completing the building of a government-dependency welfare state that FEEDS THE NON-TAXPAYER and rewards them for their votes. It is all about power and rank socialism. He CLEARLY wants to take from the producers and give to the non-producers to build socialist power. As Newt indicates, it DOES NOTHING to help the economy. In fact it will damage it greatly by demotivating and penalizing the producers who create jobs and pay the taxes. They will not continue to do that.

But socialists do not care about the consequences of their actions. Short-term myopic power is their goal, and at any expense. Obama’s plan is a socialist disaster for America and it will turn out that way. The sooner the better.

From the article:

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. Of course, reducing the top income tax rates of 28%, 33% and 35%, capital gains tax rates, and the excessive 35% corporate tax rate, would boost the economy even more. But these are the “hate” rates imposed on those who liberals think are too productive, work too hard, and earn too much. Liberals deride these taxpayers as corporate fat cats and “the rich.”

Fine. Leave those rates for a future initiative. For now we should focus on the middle-income tax rates that are attractive to cut in the current political climate. This would continue the tax cuts for low- and moderate-income workers Republicans have been adopting for 30 years now.

This is why Newt is NOT the right man for leadership positions in the party and most importantly, the position of President.

He succumbs to the left and does not fight on Principle.

He is part of the problem right now, not part of the solution.

Obama’s plan is the exact recipe for stagflation. Where have we seen this before??? The most likely scenario is that we go into recession, get a short term upturn from all the money that is being poured into the system and then settle in for the long stagflation nap (unless we kick the bastards out).

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