Yesterday, we began our exploration of Newt Gingrich’s 21st Century Contract with America by delving into his plan to repeal and replace Obamacare. Today, we’re going to talk about his pan to grow our economy by reducing burdensome regulation and lowering taxes.
Government does not create jobs. The American people create jobs.
Ronald Reagan understood this truth. His bold series of tax cuts and deregulatory measures upon taking office ended the economic stagnation of the 1970s for good by freeing American businesses to create nearly 20 million new jobs in less than a decade. In
September 1983 alone the Reagan recovery led the American people to create 1,100,000 new jobs, more jobs than the first eight months of 2011 combined.
We understood these principles when we won the first Republican majority in the House in 40 years in 1994. Balanced budgets, streamlined government and the biggest capital gains tax cut in history led to unemployment falling to under 4% by 2000.
My administration will build on this time-tested model: A profound restructuring and reduction of the tax and regulatory burden on Americans, with the very achievable goal of 4% unemployment and millions of new jobs within only a few years.
Newt’s plan is to go back to what works: Get the heck out of the way of business and let them do what they do best, create products and services that people want or need by solving a problem or providing a better product to serve our desires and sell it, creating jobs in the process. Yes, my friends, it’s time for some good old tried and true Supply Side Economics!
First, I pledge to veto any tax increase. American families and businesses deserve certainty and predictability, and I will work to make permanent all current rates of taxation that would otherwise increase automatically in 2013.
Businesses don’t know what their cost of doing business will be after 2013 when the current tax rates expire and taxes are raised on all Americans. Make the rates that have now stood for eleven years permanent, and that uncertainty disappears. Along with the repeal of Obamacare, this alone would do wonders to get Americans back to work.
My Jobs and Prosperity plan will then make four major tax cuts:
- Reduce the Corporate Tax to 12.5%.
As it sits now, our corporate tax rate is the second highest in the world. For those of you who honestly believe that the corporations pay those taxes, they don’t. They roll that cost into every item we buy. It’s a cost of doing business. It goes into the price. I’d prefer 0%, but 12.5% is very reasonable. It will reduce the incentive for businesses to take their production overseas and reduce the cost of the products we buy.
- Abolish the Capital Gains Tax
Capital Gains is one of the most ridiculous taxes in America. We pay taxes on money that was wisely invested. It’s a tax on successful investment. A tax on money that has already been taxed, essentially, when you received it as income. It disincentivises investment. People don’t want to invest if they’re going to lose 15% of their gain if they succeed. Those investments create jobs.
- Abolish the Death Tax
President George W. Bush used to say that it was wrong to tax the same money twice. It was taxed as income each time that person received a paycheck. Now the government has the nerve to tax it again at death? It’s immoral.
- 100% Expensing
Essentially this means giving businesses a write-off each year for every new equipment purchase they make. Buy a new drill press? Write it off. Buy a new company car? Write it off. It makes investment in new equipment more affordable for businesses. It’s a smaller thing but still helpful.
JOBS AND PROSPERITY PLAN: TAX SIMPLIFICATION WITH AN OPTIONAL FLAT TAX
My legislation will also include an optional flat tax. All tax filers would be given the option to pay their income taxes subject to current income tax provisions or to pay under a lower single rate of taxation with limited deductions. A revenue neutral flat tax reform would save hundreds of billions of dollars in compliance costs each year and would eliminate the need for taxes on savings, dividends, and capital gains.
This optional flat tax system will create a new personal deduction of $12,000 for every American. This deduction is well above the current poverty level, ensuring that this new system does not unfairly target the poor. The current $1,000 tax credit for each child aged sixteen or younger would also apply, as would the current earned income tax credit
An optional flat tax reform will be simple: tax returns can be done on one sheet of paper. Subtract from income a standard deduction and deductions for charity and home ownership, multiply the result by the fixed single rate of taxation of at most 15%, and the process is over.
I loved the Flat Tax as Rick Perry proposed it. I love it here as well. It’s a little different…Newt’s deduction per person is a little less and the child credits work out differently but his Flat Tax rate is 5% lower as well. I’ll give a detailed breakdown of it in the future, but it’s a good plan. As I said when breaking down Perry’s Plan (need link), an American family with two parents and two children with an average mortgage deduction and 5% charitable donations would be paying $5841.39 in taxes annually. Under Newt’s Flat Tax they would be paying $4041.38 in taxes. It’s a full $1800 less in taxes each year than the current system. It’s a great tax cut to each American. That’s $150 more dollars monthly in their budgets. It’s huge.
JOBS AND PROSPERITY PLAN: FEWER AND SMARTER REGULATIONS
To empower job-creators, we must get rid of regulations that prevent them from growing and hiring. This means taking decision-making power away from bureaucrats who don’t understand how job creation works.
Regardless of what liberals want to tell you, workers were plenty safe and the environment was well protected before Obama and the Democrats came along and decided to fix what wasn’t broken.
My Jobs and Prosperity package would repeal the Dodd-Frank legislation, a 2,300-page law passed in 2010 that mandates 400 new regulations written by unelected bureaucrats. Dodd-Frank is paralyzing lending to entrepreneurs, killing small banks, crippling small businesses, driving down the value of housing, and creating corrupting Washington controls over the biggest banks.
Regardless of what you’re being told by liberals when they blast Bank of America and other companies, it’s regulations like Dodd-Frank that even caused the $5 Debit Card fee that was so maligned by creating new costs of doing business. Getting rid of it will create jobs and lower prices.
Repeal the Sarbanes-Oxley law, which has crippled American start-ups with burdensome compliance costs, driven publicly-traded companies private, and forced American companies overseas.
Replace the National Labor Relations Board (NLRB) which is harassing job creators. When businesses are targeted unfairly by government for creating jobs in different states, businesses simply won’t create jobs in any states. We need to stop this unaccountable, activist bureaucratic agency from harassing job-creating companies. The NLRB is currently harassing Boeing, our country’s biggest exporter, because it decided to build a new factory and create hundreds of new jobs in the right-to-work state of South Carolina instead of the forced-unionization state of Washington. We need a new commonsense organization for labor-management relations to replace the NLRB. Later in this Contract, I outline ideas for pro-market, pro-growth, pro-consumer reforms to the Food and Drug Administration and the Environmental Protection Agency.
Having a government bureaucracy that stops American companies from opening a new plant on American soil because it would be in a state that disallows forced union membership is not a government agency we need. Unions have enough protections. Get rid of NLRB and replace it and more jobs will come.
Next, we’ll talk more about Speaker Gingrich’s plans for saving Medicare, Medicaid, Social Security, and a Balanced Budget. Until then, thanks for reading!