Fredipedia: The Definitive Fred Thompson Reference
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Posted on 11/25/2007 9:09:27 AM PST by GOPGuide
In today's competitive global economy, a fair, simple, and pro-growth tax system is essential for America's success. America must be the best place in the world to invest and create high-paying jobs.
Fred Thompson's Plan for Tax Relief and Economic Growth promotes fairness and simplicity in the tax code and will create greater growth in the economy. It is based on a fundamental assumption that keeping tax rates low increases economic growth and enhances American competitiveness in the global economy. Increased economic growth will lead to higher wages and higher levels of employment in America. Equally important, lower taxes enhance the personal and economic freedom of all Americans by allowing them to keep more of their hard-earned dollars. Allowing Americans to control their own financial future has been integral to our nation's economic success and strength since its founding, and is the key to our future.
The economic proposals offered by Democrats will move us in the wrong direction -- their plan for higher taxes, in particular, will reduce America's competitiveness, push investment and jobs overseas, and send more of workers' and families' income to Washington. The conservative approach is to reduce government spending and return more money to America's families.
The following elements of the Thompson Plan for Tax Relief and Economic Growth will spur economic growth and move the nation towards a fairer, simpler tax system on the way to Fred Thompson's ultimate goal of fundamental tax reform.
Permanently Extend the 2001 and 2003 Tax Cuts. Tax relief enacted in 2001 and 2003 has proved critical to generating a strong economy that has experienced growth despite the war on terror, the collapse in the housing market, and other economic challenges over the last six years. Unless action is taken, every American taxpayer will see a massive tax increase after December 31, 2010. Allowing this tax hike will impose an enormous financial burden on American families, slow economic growth, cost America jobs, and make it more difficult to address the country's long-term budget, economic, and security challenges. The Thompson plan ensures the following: Reduced individual income tax rates, saving every tax-paying family a minimum of $600. Preserving the $1000 child tax credit, which was doubled from $500 per child. Protecting Marriage penalty relief. Retaining Education tax incentives, including Coverdell Education Savings Accounts, 529 college savingsplans, and deductions for higher education expenses. Reduced tax rates on capital gains and qualified dividends. Increased expensing of investment for small businesses.
Permanently Repeal the Death Tax. Current law provides death tax relief, but only through 2010. The death tax is inherently unfair. Under the Thompson Plan, the death tax would be permanently repealed, thus protecting millions of American families, including small business owners and family farmers, from double taxation at rates ranging as high as 55 percent.
Repeal the Alternative Minimum Tax. The AMT is a separate tax system that was intended to ensure that a few high income Americans could not use deductions and credits to eliminate their tax liability. However, because the AMT is not indexed to inflation, it is penalizing Americans it was never intended to affect. While in the U.S. Senate, Fred Thompson authored legislation that would have repealed the AMT. Consistent with that earlier proposal, the Thompson plan will eliminate the AMT as part of broader tax and spending reform. Until comprehensive reform is feasible, the Thompson plan would index the exemption amounts annually so that millions of middle class families will not become subject to this tax.
Reduce the Corporate Tax Rate. The United States has one of the highest rates of tax on businesses of the industrialized nations, second only to Japan. EvenJapan is currently considering reducing its corporate tax rate. Economic studies suggest that the U.S. Treasury is actually losing tax revenue by keeping the corporate tax rate so high. In order to increase the competitiveness of U.S. companies in the global marketplace, the Thompson plan would reduce the U.S. top corporate tax rate (including the corporate capital gains tax rate) from 35 percent to no more than 27 percent, which is the approximate average of the world's leading economies—the nations of the Organization on Economic Cooperation and Development. This tax reduction will promote U.S. competitiveness, encourage companies to keep their operations (and jobs) in the U.S., and spur continued economic expansion and growth.
Permanently Extend Small Business Expensing.Small businesses create two-thirds of all new jobs in America, and employ nearly 59 million Americans -- more than half of the nation's private-sector workforce. Women own a quarter of all small businesses, minorities are nearing the 20% mark, and Hispanic Americans are opening their own businesses at a rate three times the national average. Current law allows small businesses to write-off purchases of equipment of up to $125,000 per year, rather than depreciating those assets over time. Making expensing of equipment and other small business items permanent will encourage greater investment and growth.
Update and Simplify Depreciation Schedules. The current depreciation schedules are outdated and in many cases do not reflect the realistic useful life of an asset. This is particularly true for investments in high technology. For example, computers must be depreciated over three years, even though they become obsolete in half that time. The Thompson plan would simplify and update these schedules to allow American businesses to make the investments they need to compete and create more high-quality jobs.
Expand Taxpayer Choice. The Thompson plan would give Americans greater choice about how to pay their federal taxes. This plan is based on a proposal developed by the House of Representatives Republican Study Committee that would provide taxpayers the option of remaining under the current, complex tax code or opting for a simplified, flat tax code. The simplified tax code would contain two tax rates: 10% for joint filers on income of up to $100,000 ($50,000 for singles) and 25% on income above these amounts. The standard deduction would be more than doubled to $25,000 for joint filers and $12,500 for singles. The personal exemption amount would be increased to $3,500. Therefore, a family of 4 would be exempt from income tax on the first $39,000 of income. The simplified tax code would contain no other tax credits or deductions. It would also retain the 15% tax rate on capital gains and dividends. This approach would dramatically simplify taxes for tens of millions of Americans. In addition, the larger standard deduction and personal exemption amounts will still provide significant tax relief to families with children. This proposal would serve as a stepping-stone to fundamental tax reform.
America 's economic future depends on our nation's ability to maintain its competitive and innovative spirit. Solutions to challenges in our economy are found in the homes and small businesses of ordinary Americans, not in the halls of Washington. Fred Thompson's goal is to allow Americans to retain greater control of their own money.
To do that, Fred Thompson believes we need a more limited, more effective federal government. Currently, government spending is projected to grow at nearly twice the rate of inflation over the next several years. This spending path is unsustainable and will hamper our economy unless fiscal discipline is imposed. It is critical that we address the problem of government spending, especially for entitlement programs, if the U.S. economy is grow and thrive in the coming decades.
The Thompson Plan for Tax Relief and Economic Growth provides commonsense solutions to increase American competitiveness in the 21st century. These solutions will allow Americans to keep more of their money and encourage companies and entrepreneurs to invest and create jobs in the United States. Enhancing the choices of taxpayers, permanently reducing taxes, encouraging investment in America's corporations and small businesses, and restraining government spending are all steps in the right direction. America's economy has endured several challenges over the last several years -- it is time to move forward and enter a new era of economic security and prosperity.
Fredipedia: The Definitive Fred Thompson Reference
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These are excellent proposals. If Thompson does not win the nomination, the nominee would be well served to use his proposals on taxes and illegal immigration. We need a sharp contrast between the Republican nominee and HER.
ping.
So Fred favors retaining the taxation of income. That's disappointing.
He also favors retaining the capital gains tax. Also disappointing.
Thanks, Yankee.
Professor, what do you think of Thompson’s alternative income tax plan for married couples?
Fred is gaining steam. I love it!
Looks like Fred is going to use the same kind of strategy that helped the perception change in Iraq. He keeps firing on all cylinders the media will have to take notice. Just like the NY Times had to acknowledge the surge was working in Iraq as much as they hated to do that.
Once again, Fred places his stance in writing while the others pander and spin.
Go Fred Go!
Wow, Fred’s proposal is just as solid as a rock. And it doesn’t overreach, I think he’d go for repeal of corporate taxes too, but you can only get so much.
How do you get Charlie Rangel to write this plan, and help push it through the House?
How do you get it through the Senate?
I mean, afterall, we got a few percent of this plan passed in the early 2000's - on a temporary basis.
There is no chance at all of ''comprehensive'' tax reform being passed by the Regress, whether flat tax, fair tax or any other. Therefore, the wise man settles for half a loaf now, and works to get the other half in future.
The abominable tax code wasn't put in place overnight, but over decades, a piece at a time. It will take a considerable amount of time to dismantle.
For ‘ourney’, please read ‘journey’. Sorry for the typo.
I like the concept of the Fair Tax, but there is NO WAY I want it implemented on a nationwide scale until I have seen it work in a state setting.
ovrtaxt wrote: “So Fred favors retaining the taxation of income. That’s disappointing. He also favors retaining the capital gains tax. Also disappointing.”
So what chance does anyone have of abolishing either, genius?
So you live in a fantasy world. Disappointing.
So far, the only GOP candidates that seem to have it right on taxes are Mike Huckabee, who is for the Fair Tax, and Ron Paul, who is for eliminating most of the government. Even Duncan Hunter is for more tinkering.
FRed’s plan is an awesome segue to the ultimate goal!
It may well turn out to be that the fairtax proposal is the one we settle on (I hope so), but who knows for sure?
Without a working model on a Statewide basis of, at least, three dissimilar States, we are only guessing and putting all of our eggs into one untested basket.
NOBODY! Has submitted a detailed proposal as of this date, except FRed!
I am papasmurf, and I support this message!
Sure, invoke the fairtax, and have some unknown loopholes or flaws show up and destroy our economy.
This is an awesome plan, that allows for freedom of choice, the time to test a fairtax, and a safety net.
IMO, the Fair Tax will be less likely to have unknowns and flaws because of it's simplicity. Continued tinkering, I am afraid, will only add more loopholes and more layers of complexity.
Now Fred needs to gte his plan out there so more than FReepers and insiders can see it. He needs to plan some stunts / gimics or whatever that even the MSM can’t ignore so he can use that to get his real message(s) out.
Tinkering? Don’t mean to be rude, but obama said just that.
I seriously want to know how the eventual Republican Presidential nominee, whoever he might be, will be able to also successfully create some “political coattails” for all of the conservative candidates who are running for office at every political level in ‘08 and beyond! This is too important a question to ignore, and anything less than a total conservative dominance of politics very soon and long-term socialism will definitely end up as the alternative throughout the U.S.!
Go, Fred!!!
More read meat from Fred Thompson. While the media still throws him questions about being “lazy” and continues to pronounce him dead, and while the other candidates run on pocket fluff for ideas, he just keeps making his positions on the issues the forefront of the campaign.
Go Fred!
This is awesome!
Fred knocks another issue out of the park and leaves the rest of the candidates choking on his dust!
No “fire-in-the-belly” my butt!
I believe that if the US economy could survive implementation of the sales tax for a year, it would be a good thing. But I believe that prices would be hyper-inflationary in the months prior to implementation, and sales would skid to a halt for a few months immediately after implementation. I’d love someone to show the price of a $20k automobile a year before implementation, then week to week until a year after implementation. The effects of market forces during this transition has not been well studied to my knowledge.
New housing sales would crash for months. No housing starts are likely the weeks before implementation, since a house built before implementation would cost more than a house built after implementation.
As a consumer, my strategy would be to spend before implementation and earn after implementation. It isn’t clear what that combination would do to the economy. All we have are theories.
Each of these is an issue, and they might be resolvable. But I’m not ready to bet the US economy on it at this point.
Back to the topic of the thread... What I am willing to do is to keep taxes as currently collected as low as possible to promote growth. That certainly appears achievable, and Thompson is proposing it. Making the 2001 tax cuts permanent is a great start, and is important to our economic health.
I’m open to a sales tax, but there is a lot to be proven about its effect on the economy in the implementation phase. The whole idea of chaos theory comes to mind in these uncharted waters. I think PoliticalMom’s idea of implementation in a state is a good one.
Actually, A ourney of 1000 miles begins with but a ingle tep. :)
;^)
Don’t worry too much. The FairTax has a life of its own independent of candidates. The FairTax is catching on with the public and is gaining momentum.
Fred listens. He will come around.
And besides, this is Larry Lindsey talking through Fred.
And Larry is receptive to FairTax arguments.
But here’s the deal. The FairTax will not be picked up by electable candidates until the American people get the political class to pay attention as they were forced to do with Incomprehensible Immigration Reform.
And there is something planned that will get people so steamed they will be willing to march on DC and demand a repeal of the 16th. It’s a couple of years out, so look for the political establishment to get hammered in 2010.
Goal is to set fire to a billboard size parchment of the 16th on the mall in 2013, exactly 100 years after the abomination was passed.
Or earlier, as in 2010 itself with dissolution of the American KGB called the IRS by 2013.
Don’t worry too much. The FairTax has a life of its own independent of candidates. The FairTax is catching on with the public and is gaining momentum.
Fred listens. He will come around.
And besides, this is Larry Lindsey talking through Fred.
And Larry is receptive to FairTax arguments.
But here’s the deal. The FairTax will not be picked up by electable candidates until the American people get the political class to pay attention as they were forced to do with Incomprehensible Immigration Reform.
And there is something planned that will get people so steamed they will be willing to march on DC and demand a repeal of the 16th. It’s a couple of years out, so look for the political establishment to get hammered in 2010.
Goal is to set fire to a billboard size parchment of the 16th on the mall in 2013, exactly 100 years after the abomination was passed.
Or earlier, as in 2010 itself with dissolution of the American KGB called the IRS by 2013.
It’s the same argument used over the “Life Amendment”, they want to elect Don Quixote President. Absolutism is the enemy of the possible.
“Absolutism is the enemy of the possible.”
Amen to that.
I understand that. I am not worried about how it impacts the economy after implementation. It is the transition that concerns me.
Take a state with a high income tax and let them change to a full sales tax. Imagine the changes in prices that will happen and the buying habits that will go on before and after the change. Now amp that up to the entire US economy.
We've seen what small changes in real estate foreclosures does to the economy. This change would be much bigger than that.
If a refrigerator costs $1000 today, and the transition occurred on January 1, 2008, what would be the price of the refrigerator on December 20, 2007, knowing that on January 1, 2008, it will cost $1,290? Demand would be huge. Inflation would be massive.
Then, what would be the price on February 15, 2008? Would there be any demand left? How long before people start needing refrigerators again? How long before refrigerator manafacturers can go back to work?
Remember that the refrigerators sold in early 2008 would be manufactured in 2007 under the income tax system, so the taxes are already imbedded in the price.
It seems very likely that there will be either an oversupply or an undersupply of refrigerators in 2007 or an oversupply in 2008. Either one will be bad, either causing high inflation in 2007 or shutting down factories in 2008 due to high-priced, unsold inventory.
Sales tax advocates have me agreeing on the benefits of the static cases of sales tax versus income tax. But they haven't convinced me they understand, or are capable of managing the transition between the two. I'm open to be convinced, but I have to be convinced. Meanwhile, I think a president who promises "the fair tax" is pandering a bit, because I don't think we understand the implications yet. A willingness to evaluate it is the most anyone should realistically hope for, and a couple of candidates, including Thompson, have expressed that willingness (see, I got it back on topic!).
A $1000 refrigerator will not cost $1290 under the FairTax. It will cost $1000 under the FairTax.
What you don’t see is the hidden federal taxes embedded into that $1000 refrigerator.
The price tag today would read:
Retailer’s non-federal cost, overhead and markup: $770.
Federal pass-thru taxes: $230.
Total Price: $1000
The FairTax is a replacement tax, not an add-on tax. In the refrigerator example, the FairTax replaces the federal portion of $230.
The new price tag will read:
Retailer’s price: $770.
NRST: $230.
Total Price: $1000
Some need to study more and refrain from commenting until they get enough facts.
Please don't talk down to me. Did you even read my post? Are you telling me that, under my scenario, that wages paid to refrigerator workers in 2007 would not be subject to income tax? That is the only way a refrigerator will be available to buy in January, 2008. And those taxes will be part of the cost early in the sales tax program.
If those taxes are paid in 2007 when the refrigerator is manufactured, shipped, etc., it cannot be sold at a 23% discount. The manufacturer will have ALREADY PAID THE INCOME TAX ON THE ITEM AND MUST RECOVER HIS COSTS.
Don't tell me what happens in a static case. I understand that. I don't think you understand how we get from point A to point B.
1. Seven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two others, New Hampshire and Tennessee, tax only dividend and interest income.
2. Five states have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon have a Sales Tax.
3. Therefore many states have both an income tax and a sales tax.
I see two possible scenarios from the Federal adoption of a consumption tax.
A.) Some states may think about abolish their sales tax (consumption tax) and increase their income tax to be their sole revenue gainer, being the only player in that arena now
OR
B.) Some states abolish the income tax and make their sales tax (consumption tax) their sole revenue gainer, on the same playing field as the Federal adoption (thus increasing that tax base for them).
I just can't envision any dire consequences occurring during the transition ... maybe non-automated retailers not changing over in very short order, but within 30 days is more than doable. There will be bumps in the road, more evident in collections of the tax rather than supply and demand of any product.
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