Tuesday, November 18, 2008

A better bailout proposal

Grover Norquist has a brilliant suggestion for a much better way to spend $700 billion of taxpayers' money. In my view, this proposal would guarantee a quick recovery. And with Laffer-Curve effects taken into account, they might end up costing almost nothing:
Cut the corporate income tax rate from 35% to 15%, giving us one of the lowest corporate income tax rates in the developed world. We currently have the second-highest rate in the world (behind only Japan). This new 15% rate would give us the third-lowest rate in the world (ahead of only Ireland and Iceland). It would put us well below the Euro-zone average rate of 25%. Companies would be dying to set up shop in the United States. Estimated JCT cost: $170 billion

Eliminate the capital gains and dividends tax. These rates are currently 15%, but actually represent a double-tax on corporate profits. When combined with the new, lower 15% rate on corporate income, capital costs would be at their lowest levels in nearly a century. Tax something less, and get more of it. Estimated JCT cost: $35 billion

Cut the top personal income tax rate from 35% to a flat 15%. This would give the U.S. the lowest personal income tax rate in the developed world. Estimated JCT score: $235 billion

Kill the death tax. Almost nothing is more capital-killing for small businesses and family farms than the estate, gift, and generation-skipping transfer taxes. Estimated JCT score: $24 billion

Allow companies to fully-expense capital assets purchased the first year. Under current law, businesses and other taxpayers must usually “depreciate,” or slowly-deduct, capital asset purchases the first year. This capital-boosting proposal would allow taxpayers to deduct 100% of the purchase price from their taxes in year one. Estimated JCT score: $240 billion

3 comments:

The Therapist Is In said...

from your words to god's ears

Scott Grannis said...

It really makes you wonder why it's so hard for politicians to focus on what's really important. Instead we get the ridiculous TARP or the ineffective rebates. Hard to imagine something worse than pouring more money down the Detroit drain.

Unknown said...

Allow companies to fully-expense capital assets purchased the first year. Under current law, businesses and other taxpayers must usually “depreciate,” or slowly-deduct, capital asset purchases the first year. This capital-boosting proposal would allow taxpayers to deduct 100% of the purchase price from their taxes in year one. Estimated JCT score: $240 billion

I would assume equipment capital intensive entities, such as earth movers; paving contractors, etc. would achieve a permanent effective tax rate of zero?