“It’s mind boggling. It’s a very large tax cut,” said Roberton Williams, a senior fellow at the non-partisan Tax Policy Center, which performed the analysis…”This plan means big deficits…Or huge forced spending cuts. Or both….It’s not tax reform…As long as you leave the old code in place, you’re not doing tax reform. This would absolutely make it more complex.”
– Robert Wiliams, a senior fellow at the non-partisan Tax Policy Center, which performed the analysis of Newt Gingrich’s proposed ‘tax reform’ in a recent CNNMoney piece.
Paraphrased below are some highlights from the Tax Policy Center’s analysis:
- Gingrich’s tax plan would reduce government revenue by a staggering $1.3 trillion — or 35% — in 2015, the first year the plan could be fully implemented.
- The super committee, for example, was trying to find $1.2 trillion in savings over a ten-year period. They failed. The Gingrich plan would create a gap of $1.3 trillion in just a single year.
- The highest-income individuals would see the greatest benefit. A full 99.9% of Americans with more than $1 million in income would get a tax cut. The average savings: $613,000, for an after-tax income boost of 28.7%.
- The tax rate paid by those individuals would fall to 11.9%, a reduction of almost 20%. Meanwhile, Americans making less than $100,000 would see their rates drop by between 0.5% and 3.1%. (Editors note: the 99% get barely anything, the richest of the rich get almost 20%, not counting the windfall many would receive from the elimination of estate and capital gains taxes)
- Gingrich wants to add to the current tax code by putting an optional 15% flat tax on income in place, with a $12,000 per-person deduction.
- Gingrich would like to eliminate the estate and capital gains taxes.
- For businesses, Gingrich wants to reduce the corporate tax rate from 35% to 12.5% — a move that would take the rate from one of the highest in the industrialized world to one of the lowest.
- All those tax cuts mean the federal government would take in much less money. In order to balance the budget — or get even remotely close — government spending would have to be slashed by huge amounts.
- And that, as the current Congress has made clear, is near impossible.
This is much along the lines of Rick Perry’s tax reform proposal. And even less likely to ever be implemented. The suggestions are only slightly less absurd than Ron Paul’s assertions that he would eliminate most of the federal government bureaucracy on day one. Gingrich must be forgetting that we have legislative and judicial branches that would have a pretty big say in some of these matters. It’s a truly embarrassing attempt by Gingrich to pander to very wealthy supporters by promising the sun and the moon, which he wouldn’t be able to deliver. Let alone the fact that this would amount to stomping on the fingers of the collective American working class barely hanging on the edge of the economic cliff. It truly disappoints me that the Republican Party no longer tries to take politics seriously. Angry voters like me, feeling jilted by Obama and swept by the wave of populist fervor swirling around the country, could really have jumped the bandwagon for a guy like Jon Huntsman. Instead we have insincere partisan bickering and a whole lot of status quo. Can’t we get a real “change” candidate? Or has that model been discontinued?