As most of us know, the Bush tax cuts for individual taxpayers will expire at the end of this year. This will take money out of the pockets of the middle class and hurt the economy. Democrats in Washington are more worried about punishing the rich than helping the middle class. Even if Republicans were to control Congress starting in 2011, there’s no guarantee that the middle class will not be hurt with the coming tax increases.
Right now, the economy is growing, however, it appears to be from government growth and stimulus. With middle class taxpayers losing more income to taxes, spending by these families will take further money out of the economy. This could cause even further employment losses.
The GOP in Washington doesn’t appear to be doing a good job of getting the message out. I’m not sure if they have acquiesced thinking the tax cuts won’t get past President Obama, or if they haven’t tried to get the right message out. They need to pound the message on old and new media: a new potential economic disaster is impending with these tax cuts expiring.
We need to go farther than extending the Bush tax cuts. We need to lower them even more. We need to cut corporate tax rates. We need to end earned income credit. We need a flatter and fairer income tax system.
Does anyone out there have a plan? I do… a base plan that probably needs details and revisions, but at least it’s a plan.
Corporate tax: Immediate cut to 30% flat and shave 1% off per year for 5 years until the rate reaches 25%. The US tax rate currently is one of the highest in the OECD. A 25% rate brings us closer to average. Eliminate double taxation of dividends.
Individual tax: Instead of 6 different rates (10%, 15%, 25%, 28%, 33% and 35%), only use 10% and 25%. Eliminate all marriage penalties. Abolish or overhaul alternative minimum tax.
Something must be done. The sooner the better. I doubt it will happen during this Congress, but it must be a priority in the next.