Posted on 10/25/2011 12:11:36 PM PDT by SeekAndFind
With all of the attention falling on Rick Perry and the rollout of his economic plan based on flat-tax reforms, many may have missed Newt Gingrich’s column in the Quad City Times that covers his own plan. Gingrich has discussed his plan on a number of occasions, including the debates, and it does sound … oddly familiar. In fact, it goes further than Perry’s plan does in reducing tax rates:
The key to a robust recovery in job creation is to simplify the tax code and maximize capital investment, which begins with eliminating the capital gains tax and the death tax, reducing the corporate tax to 12.5 percent, and 100 percent expensing of all new capital equipment purchases.
These tax changes will liberate private capital to move quickly to the most productive investments, thereby accelerating economic growth. This is the opposite of the failed model practiced by the Obama administration, which is bureaucracies steering taxpayer stimulus dollars to allegedly “shovel ready” jobs and politically connected firms such as Solyndra.
At the same time as we liberate capital to create new jobs, we must liberate taxpayers from the IRS tax code, which is why my jobs proposals also call for an optional flat tax of 15 or less%. All workers and businesses would have the freedom to choose each year to file their income taxes either under the new flat tax option with limited deductions or under the current U.S. income tax code. Anyone who strongly favors a deduction or credit under the federal government’s current complex income tax system would have the choice to keep filing that way.
This optional flat tax system will create a new personal deduction for every adult of $10,000 to $12,000 (double for married couple), which would be above the established poverty level at $40,000 to $48,000. The current $1,000 tax credit for each child age sixteen or younger would also apply, as would the current earned income tax credit (EITC).
Gingrich has been floating an optional flat tax for a couple of years, although it hasn’t had much traction as the former Speaker hasn’t gained much in polling. Here’s a brief thumbnail comparison between the two plans:
It would seem that Gingrich’s plan would hit lower-income households a little sooner than Perry’s, but they would also have the option of staying with the current tax code (as they would with Perry’s plan, too). The corporate and personal tax rates would be significantly lower under Gingrich’s plan, and that may make it more difficult for Gingrich to claim revenue neutrality without a huge jump in economic activity. Both, however, share a remarkable amount of similarity.
So which is better? I’d argue that both are good; I like Gingrich’s rates overall, but Perry’s exemption model for personal income would be an easier sale to lower income families. Both beat the idea of adding a national sales tax. Apart from the merits of each, I think Gingrich will have an easier time selling and defending his plan in debates and on the stump than Perry, who has struggled to respond to challenges.
Let’s test the two with a poll for Hot Air readers. Whose plan is more attractive?
Update: Gingrich tweeted out a challenge to Perry:
@GovernorPerry If u r going to bump plans w/ my friend Herman, then you can bump plans w/ me. Let’s compare flat taxes
Gingrich does just that on his website. The biggest difference is in the treatment of capital gains. Gingrich exempts all of it from taxation; Perry only does so for long-term capital gains. Perry’s plan — according to Gingrich — still taxes short-term capital gains at 35% in some cases. I’m not sure whether it’s all that good of an idea to exempt short-term cap gains from taxation; it would accelerate the kind of short-term profit-taking that has created plenty of problems for long-term growth strategies in corporate boardrooms and reward speculation, but I don’t think a 35% rate on those gains is a good idea, either.
Gingrich is totally, absolutely unelectable. I’d be quite surprised if Newt didn’t realize that.
Is he angling for a cabinet post?
New purchases?? Does that include a house?? A plane ticket? A dog? My health care supplement? My car insurance? etc, etc...
That’s nice, Newt. No go sit on the sofa and wait for your date.
Go away, Newt. Maybe Didi “Scuzzyfuzzy” will still take your calls.
Why do I like 9% and getting rid of the payroll tax better than 20% and keeping the payroll tax?
It’s a toughie, I know.
I am beginning to like Newt more and more. As of today I am leaning towards supporting Newt.
Newt is the grownup in the room. He has far more knowledge, experience, and wisdom than the rest of the field combined.
He gets my vote. The rest are pretenders.
Newt and Perry have some very similar ideas going on...both are good candidates for me.
Newt probably has less baggage than Perry and his plan looks to be better than Perry’s.
Poor Newt, even though he makes more sense and has more experience, the tea party wing and others will never get past his marriage history. Then again Romney has a similar problem.
“As of today I am leaning towards supporting Newt.”
I’m as sure as I can be that there aren’t enough people like you for Newt to get any traction.
Assuming Newt could win the nomination, (and he couldn’t), he’d get trashed in a general election.
Newt is the face of the opposition to Clinton, and a lot of independents still like Clinton. Newt’s finances and the early campaign missteps are documented. Global Warming, and more... Not A Chance.
Yeah, I've always been impressed by his wise moves.../sarc.
I still don’t like the idea of an “optional” flat tax, but Newt’s plan appeals to me more than Perry’s. I could support this if he won the nomination.
If Cain and Gingrich ran together, I wonder how their combined economic plan would look. I assume there would be at least a few changes regardless of who was on top of the ticket.
I prefer Paul’s plan. Eliminate the IRS. Take the income tax rate to zero.
Why start negotiating from 20% when you can stat at 0%
Shame on Repubs; IMHO.
I think Paul’s plan (eliminating the IRS) is good, but I don’t like much else about him.
I’d rather go to a Fair Tax where income tax got dropped altogether, but at the same time, I think we need somebody intelligent and experienced enough to know that there is life beyond the US tax system.
I started off thinking that Gingrich had no chance, but the more I hear, the more I like. He’s not a pie in the sky non-poitician populist (like Cain), but he’s also not just a successful US governor (like Perry) and he seems to realize the place of the US in world history and world events. In fact, he’s the only one who seems to get it.
Hey Newt, first tell us how to fix the wreckage from the housing bubble that you helped create...crickets.
Maybe even a new parachute so you can take a flying leap.
that’s how me and many of my friends are now feeling. with Palin dropping out and the other candidates not having the boldness/strength/conservative bonfides, I’m leaning heavily towards Newt.
I really didn’t like his GW pitch nor his attack on the tea party about scuzzy fava, but he apologized for the latter and he’s knocking GW now. and he’s WAY better than Romney.
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