While our law makers and super-committees could not come to an agreement to cut $1.2 trillion over 10 years, Gingrich want's to cut $1.3 Trillion in one year. Gingrich wants to cut revenue from taxes by 35% without going into much detail on what's he's going to have to cut out from the budget to account for the money lost.
Gingrich wants to add a flat tax option to the current tax code, which means you get to pick the current tax code or a flat tax rate of 15% with a $12,000 per-person deduction. So what that means for most Americans is that you will now have to prepare two different tax returns to see which tax code will cost you less. For low income households, the 15% flat tax rate would hurt them, since low income households currently do not pay income taxes.
Gingrich wants to Eliminate Estate and Capital Gains taxes. Which moguls like Warren Buffet, whose main source of income is investments and most of the taxes he pays is capital gains, would receive a huge tax break.
Gingrich wants to reduce the corporate tax rate from 35% to 12.5% a tax slash that would make America who has one of the highest corporate tax rate to one of the lowest in the entire world. So combining the Capital Gains tax plan and the corporate tax plan, investors of companies just hit the lottery. Companies like Wal-Mart, who already subsidize health care to the government while creating record profits to please their investors and taking a (*)(*)(*)(*) on their employees by not providing them a living wage or real benefits -- will be making a lot more money. Even if Wal-Mart created a lot of jobs from the reduction in taxes, $9.00/hr is not a living wage and the only jobs created will only create more poverty in America. Supporting Gingrich's tax plan would be supporting major corporations treating their employees like (*)(*)(*)(*) even more while stuffing the pockets of investors and corporate employees.
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70% of Americans would receive a tax decrease with an average savings of $7000, which is nice for all of us, but our problem is not taxes, it's spending and I am very anxious to see what he would do with the budget. Cutting taxes by $1.3 trillion and unable to fix the budget would create a black hole of problems. You think the economy is bad now, wait and see what the economy will be like if this plan goes into effect without fixing the budget that no one can seem to fix over the past couple years.
Now let's break down the tax brackets a little bit and see who will benefit the most from these tax cuts. Under the current tax plans, people making under $100,000 a year would save between 0.5% to 3.1% in taxes, which is not too much, but every bit helps. 0.5% - 3.1% is a respectable number for a tax decrease and a lot of Americans would agree. Higher income earners $1 million or more would receive an average savings of $613,000 or an after tax income boost of 28.7% and that does not include the millionaires investment portfolio that will no longer be getting taxed as well.
Most of Gingrich's tax plan is not tax reform, it's just an option people will choose from. The Bush tax cuts would most likely still continue to be in effect if this plan passes. Without balancing the budget a long with the Gingrich plan, I feel there would be a global economic apocalypse that none of us have ever seen before.