Tuesday, November 8, 2011

Economic Problems And Solutions

Let's review:

A related note about income mobility:
"Consider these data compiled by the Federal Reserve and put in a chart by the American Enterprise Institute's Mark J. Perry in Tuesday's Examiner. The data showed that fully 56 percent of those who in 2001 were in the lowest 20 percent quintile of income earners had moved up to a higher income quintile. At the opposite end of the spectrum, 66 percent of those who in 2001 were in the highest quintile of income earners dropped at least one quintile by 2007. And, as Perry notes on his Carpe Diem blog, lest anybody think the period spanning those years might not be representative because of the housing boom that triggered the Great Recession of 2008, data cited by the Fed point to the same pattern of high income mobility from 1996 to 2005. Fully 57.5 percent of those in the top 1 percent of income earners dropped to a lower quintile by 2005, while 57.8 percent of those in the lowest quintile in 1996 moved to a higher one by 2005. Since the Occupy Wall Street protestors took up residence in New York's Zuccotti Park, Americans have been repeatedly assaulted by Democratic politicians, academics and members of the liberal mainstream media bewailing the growing income inequality in the country. ... But such a static analysis misses entirely the more relevant question that has long been at the heart of the American economic miracle: To what degree can individuals change their economic status through their own labor and without having to overcome obstacles to their efforts by law or custom? ... The income mobility data above surely make clear that the right answer is not increasing federal taxes on the rich or expanding government regulation of business."
So what would work?  How about focusing on growth via policies that actually promote it:
The RSC, which is the most respected conservative group within Congress, has proposed a jobs growth plan today, which seeks to achieve [reforms focused on taxation, regulation, and energy production].

Much like Rick Perry’s flat tax plan, the RSC bill would offer an optional transition to a new, flatter system; however, the details are slightly different.  The RSC’s optional plan includes:
  •  Just two rates 15% (first $50,000 taxable income for single filers, $100,000 for joint filers) and 25% (taxable income above that);
  • A standard deduction of $12,500 for single filers and $25,000 for joint filers;
  • An additional deduction of $12,500 for each dependent; and
  • No other individual deductions or credits or exclusions
  • Also, after the initial choice is made, individuals are allowed one additional changeover
    between the two systems. Individuals are also allowed to
    change tax systems when a major life event (death, divorce, marriage) changes their tax filing status.
Governor Perry’s plan offers one 20% tax rate, while this plan has two tax brackets; 15% and 25%, but excludes any and every deduction, including the market-distorting mortgage interest deduction (retained in both Perry and Gingrich plans) and the deduction for state and local taxes (retained in Perry’s plan).  Both plans include a $12,500 standard deduction and dependent deduction (Gingrich’s is $12,000). ...

Other major provisions of the bill include changes to the current system as well:
  • “Reduces America’s top corporate tax rate from 35% to 25%. The legislation also directs the House Ways and Means Committee to identify tax deductions and credits that could be eliminated and to report legislation transitioning the U.S. to a territorial tax system.”  Also, they would seek to eliminate the pernicious employer healthcare exemption.
  • Permanently repeals AMT and Death Tax
  • The legislation lowers the tax on foreign-earned profits repatriated by U.S. corporations to 5.25% for one year
  • Permanently keeps CapGains taxes at 15% (Bush tax cuts).  Additionally, it eliminates the government’s ability to impose CapGains taxes on the value of the investment that rose due to inflation.
 The RSC seems to be a genuinely conservative voice in Washington, and is well accepted by the political Right, even on this particular plan.  These are common sense reforms that should be no-brainers, especially right now.  It's one thing to complain about the status quo; it's something else to put forward legitimate solutions that have been proven to work time and time again.

The key is knowing who (and what) to support.  These guys are the who, and this plan is the what.

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