Study: Gingrich tax plan would worsen deficit

Discussion in 'Politics' started by AK Forty Seven, Dec 14, 2011.


    AP By STEPHEN OHLEMACHER | AP – Mon, Dec 12, 2011

    Study: Gingrich tax plan would worsen deficit

    WASHINGTON (AP) — The tax plan by GOP presidential hopeful Newt Gingrich would provide big tax breaks to the rich and blow a huge hole in the federal budget deficit, according to an independent study released Monday.

    The analysis by the Tax Policy Center says households making more than $1 million a year would see their taxes drop by an average of 62 percent. Overall, federal tax revenues would drop by an estimated $850 billion in 2015, a figure that would dramatically worsen the budget deficit unless it is offset by unprecedented spending cuts, the study said.

    "The revenue losses are enormous," said Roberton Williams, a senior fellow at the Tax Policy Center.

    Gingrich proposes an optional 15 percent flat tax on income. Under the plan, taxpayers could stay in the current system, which has a top tax rate of 35 percent on taxable income above $379,150, or switch to the new 15 percent tax. The new tax would apply to income at all levels, but there would be a variety of tax deductions and credits.

    Gingrich would eliminate taxes on capital gains, dividends and interest, and reduce the corporate income tax rate from 35 percent to 12.5 percent. The plan would provide a personal deduction of $12,000 for every American, while maintaining the $1,000 per-child tax credit and the Earned Income Tax Credit, which benefits low-income people. Deductions for mortgage interest and charitable donations would also be maintained.

    Gingrich campaign spokesman R.C. Hammond disputed the projections on the budget deficit, saying the study doesn't account for the economic and job growth that such a tax system would generate.

    The campaign's website says a new flat tax would make it easy for families to file their returns while eliminating taxes that discourage investment.

    "An optional flat tax reform will be simple: Tax returns can be done on one sheet of paper," the website says. "Subtract from income a standard deduction and deductions for charity and home ownership, multiply the result by the fixed, single rate of taxation of at most 15 percent, and the process is over."

    The analysis comes as the former House speaker has surged to the top of the polls in the race for the Republican nomination for president. Several other candidates have offered variations of the flat tax, including Texas Gov. Rick Perry. Gingrich's chief rival, former Massachusetts Gov. Mitt Romney, has proposed changes to the tax system that are less sweeping.

    Gingrich's plan, however, would make it even more difficult for Congress to reduce the federal budget deficit, which was $1.3 trillion in the budget year that ended in September, according to the study. The issue consumed Capitol Hill for several months in the summer and fall, leading to a deficit reduction plan that both Democrats and Republicans dislike.

    No one would get a tax increase under Gingrich's plan because households could stay in the current system or switch to the new one, Williams said. Many lower- and middle-income families would probably stay in the current system because they would save money compared to Gingrich's flat tax, he said.

    But for the wealthy, lowering the top tax rate and eliminating taxes on investments would provide a huge windfall, according to the study.

    For example, a household making between $40,000 and $50,000 would get an average tax cut of 12.1 percent, while a family making between $200,000 and $500,000 would get a tax cut of 27.3 percent, according to the study.

    Households making more than $1 million would see their federal income taxes reduced by an average of $607,000 the study said.

    The Tax Policy Center compared taxes on U.S. households under current tax policy, with those imposed under the Gingrich plan. In using current tax policy, the analysis assumes that tax cuts enacted under President George W. Bush — and extended through 2012 by Obama — would be extended.

    The Tax Policy Center is a research group formed by two Washington think tanks: the Urban Institute and the Brookings Institution. Its researchers regularly testify before Congress on tax policy and its analyses during the 2008 presidential campaign were widely circulated.
  2. jem


    Are these the same people who did the study which said Obamacare would save money?
  3. I believe that was the non partisan CBO
  4. jem

    What rubbish.
    Today, the CBO (given the right data points) released new results that show that repealing Obamacare will save US taxpayers at least $540 billion.
    The American Spectator reported:

    The Congressional Budget Office, in an email to Capitol Hill staffers obtained by the Spectator, has said that repealing the national health care law would reduce net spending by $540 billion in the ten year period from 2012 through 2021. That number represents the cost of the new provisions, minus Medicare cuts. Repealing the bill would also eliminate $770 billion in taxes. It’s the tax hikes in the health care law (along with the Medicare cuts) which accounts for the $230 billion in deficit reduction.

    Of course, anyone who believes that covering 30 million more people with health insurance would save taxpayers money is a complete nutcase in the first place.
    What fools."

    A year has passed since the Affordable Care Act, widely known as “Obamacare,” became law, and the debate about whether it will increase federal health care expenditures or cut them rages on. Supporters commonly cite their own statistics to argue that that bill will save taxpayer money, but research shows that repealing Obamacare would save about $500 billion over 10 years....

    ...Then-Speaker of the House Nancy Pelosi (D-Calif.) famously said in early 2010 “we have to pass the bill [Obamacare] so that you can find out what is in it.” After this June 21 revelation, former DHHS Secretary Mike Leavitt asked a question which remains as relevant now as it was when the bill was passed: “What else is baked into this law?”

    Even government insiders are worried. The AP reports, “Medicare chief actuary Richard Foster says the situation keeps him up at night. ‘I don't generally comment on the pros or cons of policy, but that just doesn't make sense ... This is a situation that got no attention at all ... And even now, as I raise the issue with various policymakers, people are not rushing to say ... we need to do something about this.’”

    Obamacare is a misguided policy that was haphazardly pursued and is poised to misuse unspeakable sums of taxpayer money...
  5. BSAM


    Lest some of my ET brethren get confused...

    The problem isn't Newt's tax plan.

  6. Whats does Obama's plan do?

    If Gingrich plan worsens it less; then someone like Obama would call that savings.

    They never consider dynamic revenue.
    They don't figure that certain lower taxes will create growth and bring in more revenue. In that context the Gingrich plan out does Obama's
  7. jem


    And Obama and the dems sold us out to the insurance companies instead of creating useful reform. Obamacare is such a pile of crap that...

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  8. BSAM


    Thank you.
    Good post, Jem.
  9. Lucrum


    I didn't know he even had one. So far all I've heard out of that buffoon is lies and rhetoric.
    #10     Dec 14, 2011