by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Instead of vaguely mumbling about perhaps another round of tax cuts, Republicans should be trumpeting specific proposals. When putting these together, they should banish the self-imposed straitjacket of the Congressional Budget Office, which purports to tell us what effects tax and spending proposals will have on the economy over the next ten years. Its projections have almost always been wrong, so ignore them.
Another must: Don’t call this exercise “tax reform.” The word “reform” tells people nothing. Instead, use the phrase “big tax cuts.”
Here’s what an exciting package should include:
—Payroll tax cuts. Millions of people don’t pay income taxes, but everyone who receives a paycheck gets dunned for Social Security and Medicare levies. These exactions make up FICA (the Federal Insurance Contributions Act). In 2011–2012 the first two percentage points of FICA tax were suspended. Propose a three-percentage-point holiday for at least five years. …
… —Sharply lower income tax rates. Last year’s tax legislation got rid of most deductions for state and local taxes. The trouble is the bill didn’t slash the federal tax rates, which would have stimulated the economy by lessening the price of productive work, risk-taking and success. …
… —A reduced capital gains tax. This is a no-brainer. Cuts in this exaction always instantly boost revenues and stimulate investment, the crucial factor in a higher standard of living.