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CAIN: Economic crisis requires real tax reform
Half-measures and far-off fixes won’t mend our broken jobs engine
Between now and Election Day, President Obama will have to create 8 million jobs just to tie for last place with the previous worst recovery since the Great Depression. Meanwhile, Americans are rightly demanding dramatic overhauls to get this country back on its feet. What does the president do? He doubles down on his philosophy of continuing the beatings until morale improves.
My fellow presidential candidates, to varying degrees, have been tinkering around the edges. With all due respect, you don’t prune weeds — you pull them out at the roots.
Leave it to a politician to start with the current tax code and then move a step or two in the right direction. Leave it to a real businessman to start with what is right and get there immediately.
Former Massachusetts Gov. Mitt Romney’s 160-page, 59-point plan has “faculty lounge” written all over it. It protects most of the current tax code. Looking for an executive summary, I flipped to the appendix. Frankly, Mr. Romney lost me after his first two points: “Maintain current tax rates …” and “Maintain current tax rates. …” Are those rates really worth maintaining?
His best idea is to “pursue” conservative tax overhaul “over the long term” that includes lower rates and a broader base. Why take your best idea and push it off into some future pursuit? That is confusing motion for action.
Rep. Michele Bachmann also favors a broader system that eliminates deductions and gets everyone to pay income taxes. Pssst, it’s called “9-9-9.”
Mr. Romney claims his plan promotes savings and investment but, incredibly, it doesn’t eliminate the capital gains tax and doesn’t end the double taxation of dividends (a stance apparently shared by Mrs. Bachmann and Texas Gov. Rick Perry). The capital gains tax is nothing more than a wall separating those with ideas from those with capital. It makes no sense to wall off those with ideas, for that is where we find the most business formation, innovation and job creation. Mr. Romney: “Tear down this wall!”
Former Utah Gov. Jon Huntsman properly treats capital gains and dividends. However, his top marginal rates are 23 percent for personal income and 25 percent for corporate income. Further, he doesn’t end the tug of war between the half of Americans who pay no income tax and the other half who pay them all.
Giving credit where credit is due, former House Speaker Newt Gingrich gets the closest in reducing personal and corporate marginal rates. Now all he needs to do is eliminate payroll taxes, capital gains taxes, the repatriated profits tax and the double taxation of dividends.
The biggest obstacle to true tax reform may be that half of Americans don’t pay income taxes. Why let that get in the way? I remove obstacles for a living. Remember, these folks pay plenty of payroll taxes. A tax is a tax is a tax. My plan eliminates the payroll tax and unites all taxpayers so that we all pull from the same side of the rope for low rates.
Largely absent in this conversation is Mr. Perry. An advantage he has over the other candidates is that by the time he entered the race, my plan was already written and scored. All he has to do now is adopt it. Was that his strategy all along?
Americans, like my Uncle Leroy and Aunt Bessie, want common-sense solutions — not more fine-tuning. My plan passes the Leroy-and-Bessie test.
The 9-9-9 Plan, like all aspects of my economic policy, is grounded in my three economic guiding principles: 1) Production, not consumption, drives the economy. 2) Risk-taking creates growth. 3) Units of measurement must be dependable.
The current personal and corporate tax codes would be replaced completely. There’s more. Payroll taxes: gone. The death tax: killed. The Alternative Minimum Tax (which should be called by its true name, a Mandatory Maximum Tax): Don’t let the door hit you on the way out. The capital gains tax: zero. Repatriated profits: Welcome home, our friend. Double taxation of dividends: eliminated. If you want a real pro-growth, pro-jobs, pro-export, pro-taxpayer plan, this is it:
• A 9 percent corporate flat tax. Businesses would deduct purchases from other U.S.-based businesses and all capital investment. The resulting gross income would be taxed at 9 percent.
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