Tax Lawyer's Blog

In a column written for the Wall Street Journal, former Speaker of the House, Newt Gingrich, says he wants Obama and the 111th Democratic Congress-Elect to put their money where their mouths have been and slash middle-class tax rates rather than give refundable credits to the poor who pay no income tax:

For a real middle-class tax cut, we should cut the 25% income tax rate that now applies to single workers earning $32,550 to $78,850, and married couples earning $65,100 to $131,450. We should reduce that rate down to the 15% rate paid by workers below these income levels. That would, in effect, establish a flat-rate tax of 15% for close to 90% of American workers.

Marginal tax rates for middle-income families in the 25% tax bracket are too high. Add in effective payroll tax rates of 15% and state income taxes, and these workers are laboring under marginal tax rates of close to 50%. No wonder middle-income wage growth has slowed sharply. Reducing the marginal tax rates for these middle-income earners would lead to income increases for middle-income workers, just as reducing excessive marginal tax rates for higher-income workers did, going all the way back to the Kennedy tax cuts of the 1960s.

Gingrich says that the 40% cut in middle-class tax rates would give a “powerful boost” to the economy by giving the middle-class incentives to save, work and invest:

Because of the highly beneficial effect of these middle-class rate reductions on our economy, and the freedom they would give workers to spend, save or invest their money as they choose, this proposal would likely enjoy broad public support and present a viable alternative to the liberal social purposes of President-elect Obama’s tax credits.

Good ol’ Newt has been very vocal of late about what he thinks the Obama administration should do to resolve America’s economic problems. I have a feeling he’s setting himself up for a 2012 run at the Republican nomination.

Whatever you think about Gingrich’s policies, he is, I think, the most outside-of-the-box conservative thinker we have in America today.

Bookmark & Share: