Posted on 12/02/2014 6:59:08 AM PST by SeekAndFind
The midterms are over, meaning the 2016 White House race has begun. Here's my bold prediction: Almost all the GOP presidential contenders will offer a big tax-cut plan.
Of course they will.
Income tax cuts have been the defining issue of the modern Republican Party since the 1980 election of Ronald Reagan. As conservative political reporter Robert Novak once declared, "God put the Republican Party on earth to cut taxes. If they don't do that, they have no useful function."
And if history is a reliable guide, most of those tax-cut plans will focus on cutting personal taxes so the richest Americans pay dramatically less to Uncle Sam. For instance: The 1 percent would have paid $150,000 a year less under Mitt Romney's plan in 2012, $238,000 less under Herman Cain's "9-9-9" plan, and $340,000 under New Gingrich's flat-tax plan. More recently, incoming House Ways and Means Chairman Paul Ryan has produced budgets lowering the top rate — currently 40 percent — to 25 percent, which would be its lowest level since the 1920s Coolidge administration. Americans might naturally conclude that the GOP's big, bold agenda for boosting economic growth, job creation, and middle-class incomes begins with letting the rich keep more of what they make.
And sometimes lowering top tax rates is pretty important, like back in 1980 when the top marginal rate was 70 percent. Even President Barack Obama has acknowledged, in his book The Audacity of Hope, that slashing the rate then was probably a good idea. But as an economic strategy today, such rate cuts are problematic.
First, there's little evidence they will supercharge the economy. Modeling of a recent plan put forward by Rep. Dave Camp (R-Mich.), the outgoing Ways and Means chairman, suggests it would increase the economy's size by less than 1 percent over a decade. Second, the income gains from modestly faster growth might not reach the middle class, where after-tax income has been stagnant for nearly a decade. The Congressional Budget Office recently found that top income growth has been five times faster than middle-income growth over the past 30 years.
Finally, sharply cutting top rates will lose the government trillions in revenue at a time the national debt is at historically high levels — unless, that is, lots of tax breaks are also eliminated. But many of those — such as the Earned Income Tax Credit — benefit middle- and working-class Americans, which is why more than 40 percent pay no federal income taxes, according to the Tax Policy Center.
Surely Republicans wouldn't raise taxes on the beleaguered middle to help pay for high-end tax cuts? Some might. Recently Stephen Moore, chief economist at the GOP-aligned Heritage Foundation, argued that tax reform should "ensure that everyone — except the very poor — pays at least some income tax." Keep in mind that according to the 2012 exit polls, Mitt Romney lost to Obama 86 percent to 16 percent among voters who most valued empathy in their presidential pick. Is the party shooting for 100-0 next time around? Hillary Clinton would like to know.
If Republicans want to cut income taxes, they should make sure the middle class directly benefits — even if some rich people pay more as an offset.
A plan put forward by Senators Mike Lee (R-Utah) and Marco Rubio (R-Fla.) would expand the child tax credit and apply it against both income and payroll taxes, the latter of which is what really hits most lower- and middle-income families. A more targeted plan from American Enterprise Institute economist John Makin would focus on cutting payroll taxes for households earning less than the median income, or about $52,000 per year. Such measures could be a key part of a pro-growth, pro-middle class agenda that also includes making a college education and health insurance coverage more affordable, and expanding income subsidies for low-skill workers. Oh, and cutting business taxes, too, since workers part at least part of that burden.
The GOP needs a new "useful function" — helping middle-class class and poor Americans climb the opportunity ladder.
Tax cuts for the rich = tax cuts for the middle class.
Dunno, it seemed to work when the Obamadork and his collection of low IQ lib supporters did that for GM, insurance companies supporting his idiot health program, and the numerous other examples of crony capitalism extant.
Shove it, dork.
Not my favorite piece from Pethokoukis.....
I hate marxists.
One smarr probrem, Grasshopper. Lowering taxes actually increases revenue to the Treasury which gives totalitarians even more money to spend.
The GOP could get more creative by tying cuts in corporate tax rates to percentages of US citizens hired and percentages of operations located in the US and compliance with legal work status verification and a commitment to NOT replace US workers with foreign ones.
I’m not usually for this kind of thing but the fact is it already exists and we can either cast taxes in such a way that it wins the hearts and minds of the US working class or we can cast it so it appears to benefit only the most well off which of course isn’t true but with a media as it is perception becomes reality.
Also by doing this we put Democrats and pro amnesty types on the defensive. Most Americans believe American citizens should be first in line for US jobs and should not be replaced by foreign labor. Its an easy win for the GOP and it would reward companies that are pro US and incentify a return to the US.
typical "progressive" moron drooling the same old tired inaccurate BS.
lowering tax rates have repeatedly proven to have a positive growth effect on the economy and to increase revenue to the govt. thats a FACT, something with which a liberal nitwit is not familiar.
THANKS LIBTARDS! ALWAYS APPRECIATE YOUR ADVICE ON HOW WE CAN WIN ELECTIONS
Pethokoukis may have a point here. After all, the 1 % have made out like bandits during Obozo’s administration. I say tax increases for them, but only if the increases goes toward cutting the deficit and are earmarked for that only and nothing else. The Republicans need to focus on stopping illegal immigration. That is a winning ticket. Most Americans are fed up with our country being invaded.
They don’t EVER “promise tax cuts for the rich”.
They promise tax cuts for tax PAYERS.
And the left spins that as tax cuts for the “rich”.
Do an Obama!
Tax!!!! Tax everyone who does not pay a tax. The lower tax level is exempt from taxes so remove that exemption and have a flat minimum figure for everyone in that category. If even a dollar, it would be a sizable addition to the treasury.
But the idea I like best is: approve a constitutional amendment that only citizen tax payers are eligible to vote in national elections - no tax, no ballot!
Any process t to truly looking at how and what you do and if still need to do it. It is brutal, but you need to do sometimes to survive, especially if you mission is shareholder value and you pedal to GAAP and Sarb-Ox.
This article didn't mention re-inventing/downsizing at all.
We haven't done that with Fedzilla and every freakin' program, line item, grant, and Cabinet Level Departments.
Why no mention of not spending a dime on NPR/PBS, and privatizing AMTRAK, and finally getting rid of Fannie and Freddie and Sally Mae for starters.
Lord help us if "Jim P" is another beltway bandit mindset that this is off limits, because my guess darn near 100% of the Reaganites aka us Tea Partier's want to lift up the hood and get it running right....
Does the writer not see how dangerous it is to have a tax system where 40% have nothing to lose and everything to gain if rates are jacked up?
One of the primary reasons I always supported tax cuts was to defund and cut back on the massive growth of the government state. But with all the endless deficit-spending and QE money-printing (and the apparent lack of economic punishment from doing so, via interest rates and such), the whole aspect of taxes on government spending seems a rather moot part of the equation now.
Added to this, I don’t really trust the corrupt scumbags who would just make changes to the system to promote their own winners and losers. So, I can’t say the issue of ‘taxes’ resonates with me the way it once did, in swaying my vote, other than perhaps in terms of local scenarios. And I certainly have no sympathy for the Wall Street crowd, with their pushing of things like amnesty and the homo agenda. Anything that hurts them is now fine by me.
Only because of increasing stock prices & real estate. And those are propped up by QE and zero interest rates.
Cut taxes and the 1% will make money, but the old fashioned way, and a rising tide etc.
Of course the writer sees! The writer does not care!
Cut corporate taxes because corporations don’t pay taxes, they simply pass them on to their customers as a cost of doing business.
There was a big discussion last week among conservatives that Pethokoukis has gone off the rails. Seems he's buying into some bad ideas. On one hand here, I agree. The 2012 tax plan was solely a debate on the top 1 percent. It was easy to demagogue. Tax reform is a winnig debate. Romney's position was a political loser. Bush won largely on across the board rate reductions. In 2016 we are ripe for a real reform of the irs....cleaning up the code, lowering rates for all and simplifying it for lower brackets as well as higher.
Sadly, I think he is right. Economically fatuous, but politically correct.
2016 is going to be fought on the battlefield of Economic Populism, for better or worse.
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