Comparing the Gingrich and Romney tax plans

(CBS News) 

At least Newt Gingrich and Mitt Romney agree on one thing: the American tax system needs an overhaul.

That said, their ideas on what that overhaul should look like are very different. CBS News examined the tax plans from the top GOP presidential candidates.

CBS News correspondent Norah O'Donnell reports that Newt Gingrich calls his tax plan a page from Ronald Reagan's playbook. (Watch O'Donnell's full reports at left.)

"I want to create jobs very dramatically, so we have zero capital gains tax to bring in hundreds of billions of dollars of new revenue, new investments," Gingrich says.

Capital gains tax is paid on income from investments. It's 15 percent right now, and that's why taxes are low on billionaires like Warren Buffett. But Gingrich says that's not low enough, and he would also eliminate the tax on capital gains, as well as abolish estate taxes.

For corporations, he would cut income taxes from a maximum of 35 percent to 12.5 percent. Individual taxpayers would have the choice to file under the current tax policy or choose a 15 percent flat tax.

Gingrich is convinced that reducing or eliminating all these taxes will actually raise revenues for the government by stimulating investment and expanding business.

"When we cut the capital gains tax in the 90s, the revenue went up dramatically. When we cut taxes in the 80s, we had an explosion of 16 million new jobs," Gingrich said.

To critics who say his plans would blow a hole in the deficit, Gingrich says he would insist on controlling spending, on reforming entitlements and on opening up federal lands for on and off-shore oil and gas exploration to increase revenues.

CBS News correspondent Jan Crawford reports that Romney is not calling for immediate radical change. He would maintain existing personal income tax rates for now, but with several key changes to encourage savings and spur job creation. (Watch Crawford's full report at left.)

"For those in middle income, anyone earning under $200,000 a year, I would propose paying no taxes whatsoever on their savings. I think the people who've been hurt most in the Obama economy should be able to save money tax free," Romney says.

That means Romney would eliminate the tax on dividends, interest and capital gains only for people who make less than $200,000 a year. He would make other changes that affect all taxpayers, including: Permanently extending the Bush tax cuts, which lowered individual income tax rates and cut the child tax credit in half; Eliminating the estate tax; and cutting the corporate tax rate from 35 percent to 25 percent.

Romney has come under fire from some conservatives - and the Wall Street Journal - because they say his tax plan is too timid and doesn't go far enough to lower taxes now.

The non-partisan Tax Policy Center in Washington estimates that if the Bush tax cuts stay in plane, the Romney plan would add $180 billion to the deficit in the year 2015. The Gingrich plan would add $850 billion that year.

The candidates argue that cutting taxes would create so many businesses and jobs that ultimately there would be more tax revenue, not less.

[aldrich617]

Since the Romney proposals described in this article amount really to Gingrich-lite,I will restrict my point-by-point response to statements attributed to Gingrich personally and also to the CBS summarizations of his well-known positions:

G says: "I want to create jobs very dramatically, so we have zero capital gains tax
to bring in hundreds of billions of dollars of new revenue, new investments"
A says: The basic problem with the thesis that low tax rates for the "investment class"
will actually result in more investment and jobs is that there is very little left to invest in
profitably - NOT EVEN ZERO INTEREST RATES ON BORROWING CAN PROD
INVESTMENT when it is trumped by the excess factory capacity that exists in nearly
every conceivable commodity. The very success of Capitalism in completing the build-out
of the basic infrastructure of production world-wide means that we are reaching the limits
of growth - THE ZER0-SUM GAME. This means that competition will intensify between
groups, and that the only way that one group can gain market share will be to damage the
chances of all others. To this end Gingrich and his sympaticos will not invest in non-existent
job possibilities but instead in more lobbyists, media companies and politician to protect and
extend their ill-gotten gains. Since their allies in Congress can prevent increases in the deficit,
the plan is to take the money to pay for their tax breaks directly out of the pocket of public
service employees, as well as the poor, the sick and the old who are alas not part of their
core interest community. How anyone could still buy the feeble Gingrich cover story that tax breaks and
unfettered Capitalism will result in jobs is a testament only to skillful Republican propaganda,
not to the facts. Even the good memories of job creation in the Reagan era were probably
due more to the massive expansion of credit than to any real insight in tax policy.

CBS says: "Capital gains tax is paid on income from investments. It's 15 percent right now,
... but Gingrich says that's not low enough, and he would also eliminate the tax on capital gains,
as well as abolish estate taxes. Gingrich is convinced that reducing or eliminating all these taxes
will actually raise revenues for the government by stimulating investment and expanding business".
A: All of this is pure fiction and delusion. There can be no significant economic expansion unless
people have money or credit to purchase more products, and Gingrich's plan to take the money of
the Middle Class and put it into the pockets of a right wing network of Insider Hustlers is exactly the
wrong thing to do for the country.

G says: "When we cut the capital gains tax in the 90s, the revenue went up dramatically.
When we cut taxes in the 80s, we had an explosion of 16 million new jobs".
A says: There have been various studies done on the effect of income tax rates on revenue collected (from the rich) and the most credible of these puts a level of 49% (a realistic Laffer
curve variant in tune with the more enlightened European countries) as being fairly close
to the maximum allowable without detering investment. Due to Automation jobs do not
necessarily follow investment as they once did, but still a massive increase in Demand
could make it seem like happy days are here again for a time for those needing work.
This Demand could perhaps be created by legislating that high nominal tax rate (49%) mentioned above combined
with a tax credit for the purchase of verifiable American-made products. A ZERO TAX BILL
would be possible for an individual if, for example, that person had an AGI of one million dollars
(of which he would owe about half under the new tax rate) and spent s two million dollars in a
binge of conspicuous consumption of products made here at home. Manufacturers might be falling
over themselves to come back to the US to take advantage of this new policy, and hopefully there
would be a BONANZA OF JOBS (at the expense of our trading partners) to go along their return.
Where is genius Newt (and Barrack) on this obvious idea?

[notparicular]

Just give us back the money we paid for Social Security. I have been paying that money to the government in addition to my Federal and state taxes. No SS admin has to pay me so much every month as a handout. Just give me back my own money that I have paid (still paying) for the last 40 years. It is not an entitlement; it is my own money.

[Migrant3]

Put Gingrich's in a white suit with a 3 foot sandwich and he would be a spitting image of Boss Hog.

[goptarded]

We must do whatever is needed to remove republicans from power. They are destroying America by redistributing all of the wealth to the aristocracy.

POWER TO THE PEOPLE!!

[CaptainSmollett]

You have no clue about economics whatsoever. Wealth creation is the life-blood of any society. The very reason that we have been suffering as a nation for the past three years is the slow-down in wealth creation. You envious liberals take the us-versus-them mantality, when in reality we are all part of the same soup.

[2happy2ride]

It would sure be nice if those that comment actually understood our tax system and the difference between income tax, payroll tax and capital gains tax.
It reminds me of a Mose Alison song, Your Mind is on Vacation & Your Mouth is Working Overtime.

[occupy_cbs]

RobAla: "When President Reagan cut taxes..."




............................he and his budget director, david stockman, found that it was a huge mistake fueling nothing but HUGE budget DEFICITS!

That's why they RAISED TAXES 11 times after finding "supply side economic insanity" was nothing but a boondoggle!

[occupy_cbs]

Reagan insider: 'GOP destroyed U.S. economy'

David Stockman, President Ronald Reagan's director of the Office of Management and Budget, wrote in "Four Deformations of the Apocalypse," the GOP has already "destroyed" the U.S. economy, setting up an "American Apocalypse." The economic decisions of the GOP the past 40 years is destroying not just the economy and capitalism, but the America dream.

[starving1968-3]

"The candidates argue that cutting taxes would create so many businesses and jobs that ultimately there would be more tax revenue, not less."






That's what Bush said in 2001 and 2003 just before his signature "tax cuts" turned the first ever budget surplus into the biggest deficit ever.

[occupy_cbs]

The Fiscally Reckless Mitch Daniels

Delivering the GOP rebuttal to President Obama's State of the Union, Indiana Gov. Mitch Daniels is hailed as a "fiscal conservative," but his actual record as George W. Bush's budget director was one of fiscal recklessness, taking America from surpluses to massive deficits.

Daniels oversaw the federal budget as it was making its historic reversal from a $236 billion surplus -- then on a trajectory to eliminate the entire federal debt in a decade -- to a $400 billion deficit by the time Daniels left the Office of Management and Budget in June 2003.

Plus, because of proposals developed on Daniels's watch -- such as tax cuts favoring the rich and unpaid-for projects, including the invasion of Iraq and a new prescription drug plan -- the fiscal situation of the federal government continued to deteriorate over the ensuing years, becoming a trillion-dollar-plus annual deficit by the time Bush left the White House in 2009.

[occupy_cbs]

nearl451: "Even David Stockmann acknowledges the folly of assuming sustained supply-side economics works."



Reagan insider: 'GOP destroyed U.S. economy'

David Stockman, President Ronald Reagan's director of the Office of Management and Budget, wrote in "Four Deformations of the Apocalypse," the GOP has already "destroyed" the U.S. economy, setting up an "American Apocalypse." The economic decisions of the GOP the past 40 years is destroying not just the economy and capitalism, but the America dream.

[occupy_cbs]

Debbie Bosanek, Buffett's secretary, pays a tax rate of 35.8 percent of income, while Buffett pays a rate at 17.4 percent.

"I don't pay hardly any payroll taxes," Buffett said. "Gov. Romney hardly pays any payroll taxes, Newt Gingrich hardly pays any payroll taxes. Debbie pays lots of payroll taxes."

He lashed out at assertions from many Republican leaders that the "Buffett rule" is class warfare.

"If this is a war, my side has the nuclear bomb," Buffett said. "We have K Street. ... We have Wall Street. Debbie doesn't have anybody. I want a government that is responsive to the people who got the short straw in life."

[pendulumswings]

I think it is common knowledge that President Reagan championed the 1986 Tax Act that taxed earned and unearned income the same It was not until President Bush took over was the tax on unearned income reduced. I think the candidates should look at history before they compare themselves to President Reagan.