Thursday, January 29, 2009
"The American Option"
Unlike the Democrats in the past, Republicans in Congress, rather than screeching and complaining, have come up with a better idea to pull us out of this economic nose dive. This plan is from the Heritage Foundation and will be presented on the floor of the Senate by Senator Jim Demint from South Carolina in the coming days. Let's pray common sense prevails.
From today's speech by Senator Demint:
. . . Fortunately, there is another way. A better way. A way that will actually stimulate the economy, spur investment, and create jobs. A way that will permanently keep billions of dollars--immediately--in the private sector: in the hands of Americans who buy goods, provide services, start businesses, and hire employees.
Call it "The American Option." It is not innovative or particularly clever. In fact, it's only 11 pages. But it will work. And it is based on proven American principles of freedom and the opportunity to succeed. The plan--developed by scholars J. D. Foster and William Beach here at The Heritage Foundation--is the best anyone has proposed since the recession first took hold. I have adopted the plan and will offer it on the Senate floor next week as a substitute.
The idea is simple: first, make the temporary tax cuts of 2001 and 2003--now set to expire in 2011--permanent. Short-term tax relief, of the sort envisioned by the Democrats' plan does not stimulate economic growth.
It's the difference between a $1,000 gift one month, which you might put away or use to pay off some credit card debt, and a $1,000-a-month raise, which might get you thinking about buying a house or a new car or taking a summer vacation or starting a new business.
To encourage people to take risks and create new jobs, we must make tax relief for families and small businesses permanent. Recessions are caused by uncertainty that keeps investors on the sidelines. By making low taxes permanent, plans and decisions can be made with an eye toward the future.
With the 2011 tax-bomb defused, our plan will cut income tax rates across the board compared to current law. The top marginal rate--the one paid by most of the small businesses that create new jobs-- will fall from 35 percent to 25 percent. It simplifies the code to include only two other brackets, 15 and 10 percent.
These marginal rate reductions would be permanent and give the private sector maximum predictability as it decides how to best spend its recovered income. This is a matter of fairness. No American family should be forced to pay the federal govern- ment more than 25 percent of the fruits of their hard labor.
Just as we cut taxes for families and small businesses, we need to cut them for corporations as well, from 35 percent to 25 percent. And we shouldn't be afraid to say so. Our corporate tax rate is one of the highest in the world, driving invest ment and jobs overseas. Lowering this key rate will unlock trillions of dollars to be invested in America instead of abroad.
And rather than giving large companies loop holes and targeted tax benefits--which only encourage them to spend money on the lobbyists who secure such goodies--Congress should get out of the business of picking winners and losers in the market and simply cut everyone's taxes and let the best company win. My plan will make businesses compete for consumers, not Congressmen.
To further simplify and improve the code, our plan would also:
permanently repeal the alternative minimum tax once and for all;
permanently maintain the capital gains and divi dends taxes at 15 percent;
permanently kill the Death Tax for estates under $5 million, and cut the tax rate to 15 percent for those above;
permanently extend the $1,000-per-child tax credit;
permanently repeal the marriage tax penalty;
permanently limit itemized deductions to home mortgage interest and charitable contributions.
The Heritage Center for Data Analysis widely respected economic forecasting model projects this plan would create nearly 500,000 jobs this year, 1.3 million next year, 7.5 million by 2013, and a total of nearly 18 million jobs over the next decade.
The Democrats are forced to rely on hope to save or create just 3 million jobs as a result of their plan. When pressed, they refuse to stand behind these numbers. But with our plan--the American Option--long-term, broad-based tax cuts will spur the American economy to create 7.5 million jobs in five years and nearly 18 million jobs in just ten years. That is an average of over 2 million new jobs a year.
Instead of taking a trillion dollars out of the economy so politicians can spread it around to special interests, the American Option will keep a trillion more dollars in the hands of American workers and businesses. Instead of growing government, where waste and corruption run rampant, we grow the private sector, where innovation flourishes. Instead of giving the power and control of our economy to politicians and bureaucrats, we give Americans and small businesses the freedom to spend and invest their own money.
If you think this makes sense, contact your Senator ASAP! Send this plan to friends. Get the word out. Or else we all are in big trouble.