Republican presidential hopeful Tim Pawlenty has proposed a new set of tax rates.. He would reduce the tax rates to 10% and 25%.
Pawlenty says “on the individual rates we need a simpler, fairer and flatter tax system overall. I propose just two rates, 10% and 25%. Under my plan, those who currently pay no income tax would stay at a zero rate. After that, the first fifty-thousand dollars of income or one-hundred thousand for married couples would be taxed at 10%. Everything above that would be taxed at 25%. That’s it.”
All together, Pawlenty’s tax proposal would generate an average revenue level of just 13.6 percent of GDP from 2013-2021. That translates to a tax cut of $7.8 trillion, and that’s on top of $2.5 trillion cost of extending all of the Bush tax cuts (see below for details on how this estimate was calculated).
Those numbers are worth repeating. The Bush tax cuts alone will cost $2.5 trillion. Adding on Pawlenty’s proposal would bring the cost to $10.3 trillion, a four-fold increase.
It’s important to recall what is the impact that the Bush Tax Cuts had on our deficit:
At a time when we need to be investing those dollars in infrastructure, education, and energy, it’s mind boggling that Pawlenty would propose such a massive waste of resources, especially when economic history tells us that irresponsible tax cuts do not generate economic growth. It’s an utterly insane idea, but clearly that’s what Tim Pawlenty thinks he needs to propose in order to win the GOP nomination.
If enacted the Pawlenty proposal would create massive unemployment among accountants, make doing taxes a snap and, alas, bankrupt the country. It would lower the margin top rate for billionaires from today’s 35 percent to 25 percent. Given lower tax rates, less money would flow into the government, a government which already has a massive deficit. In comparison, the top marginal tax rate under President Reagan was 69% and 92% under President Eisenhower, 91% under Kennedy, 77% under Nixon and Johnson, and 39.6% under Clinton.
“In addition,” says Pawlenty, “we should eliminate all together the capital gains tax, interest income tax, dividends tax and the death tax. Government has no moral or economic basis to claim a second share of the same income. When you deposit a dollar in your bank account. Every penny should be forevermore yours and your children’s. Not the federal government’s.”
To understand what Pawlenty is saying, look at the mechanics of his proposal: If you earn $50,000 a year from work and overtime your income will be subject to the income tax. If you make $50,000 a year from interest, dividends or selling stock you pay zero. If you make $100 million a year from interest, dividends or selling stock you pay zero. If you inherit $20 million there will be no tax.
The Pawlenty tax program, if enacted, would split the country in two. Most households would be taxed on all the income they bring in — because all the income they bring in is from labor — while the richest among us would pay little or nothing to support what would be left of the government.
At Forbes, they call it the ‘Half Million Dollar Tax Cut per Millionaire’… This tax cut proposal would cut taxes by an average of $490,000 per millionaire in 2013. It would boost their average after-tax income from about $2 million to $2.5 million.
By comparison, people earning $40,000 to $50,000 would get an average tax cut of about $700, or less than 2 percent of after-tax income.
And the most astonishing is that instead of being a controversial proposal… it was seconded by other Republican presidential hopefuls.
This is CRIMINAL and INSANE !!!!!!