My pal Art Laffer heaps gobs of praise on Newt Gingrich’s tax plan (an optional 15 percent flat tax for individuals, 12.5 percent for businesses, no investment taxes) today in the WSJ. He notes that each of the main components has been tried elsewhere to great success:
Hong Kong, where there has been a 15% flat income tax on individuals since 1947, is truly a shining city on the hill and one of the most prosperous cities in history. Ireland’s 12.5% flat business income tax propelled the Emerald Isle out of two and a half centuries of .
I agree. I love, love the idea of a flat consumption tax, which is really what Gingrich is proposing since he would also get rid of investment taxes for individuals and allow full and immediate expansion of capital investment by business.
If only Gingrich were as bold and specific when it came to cutting spending. Even Laffer admits in the op-ed that the Gingrich plan—despite faster economic growth—would be a revenue loser to the government. Now, that’s not such a big deal if you also plan to slash the size of government. But Gingrich doesn’t say what he would cut, aside from, dare I say it, grandiose projections like this one in his “21st Century Contract for America”:
Strong America Now, an organization dedicated to bringing modern management to government at every level, estimates that we can save $500 billion a year in spending through proven waste-cutting and value-enhancing techniques from the private sector, such as Lean Six Sigma.
Boy, I hope he’s right. But I would be more impressed if Gingrich moved beyond “waste-cutting and value-enhancing techniques” to actually cutting something. It is possible, you know. Last summer, Senator Tom Coburn released a 600-page plan to cut spending by $9 trillion over the next decade. It had a lot of stuff like this in it:
– Reduce the number of limos owned by federal agencies. Savings: $10.4 million a year.
– Eliminate NSF’s Social, Behavioral, and Economics (SBE) Directorate. Savings: $2.8 billion.
– End the Parole Commission, which was eliminated by Congress along with federal parole in 1984. Savings: $12.9 million per year.
Read More at The American By James Pethokoukis, The American
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As long as he goes to an out right flat tax and eliminates all write offs and loopholes it will work. This would eliminate the need for such an extensive IRS and would cut a sizable chunk from the budget. This would also eliminate the need to file tax returns every year.
A flat tax could be the FAIR TAX. Google it and see for yourself how it would help the economy. Educate yourself and look into the FAIR TAX.
If Newt's idea on how to balance a budget is to take money out of Social Security, I don't think anyone could trust him about anything to do with the economy. I was glad to hear Ron Paul bring that up.