Call it ‘The American Option.’ It is not innovative or particularly clever. In fact, it’s only 11 pages. But it will work. And it is based on proven American principles of freedom and the opportunity to succeed. The plan–developed by scholars J. D. Foster and William Beach here at The Heritage Foundation–is the best anyone has proposed since the recession first took hold. –Senator Jim DeMint (R-SC), January 29, 2009
This week many Americans are reminded of their tax burden. While they fill out their 1040 forms, they take note of the often alarming amount they pay to the federal government every year in taxes. And while the President wants to further raise taxes, The Heritage Foundation has a plan for Americas cumbersome tax system.
The Obama budget raises taxes by $1.4 trillion. Starting in 2011:
Married taxpayers will see the marriage penalty return.
Federal death taxes will come back to life, even though they were supposed to be eliminated in 2010.
Those making over $250,000 a year will see their tax rate increase from 35% to almost 40%.
Other worrisome taxes are being proposed too. Obamas plan to reduce charitable deductions will take away incentives to give to private charities, leaving the federal government with more money, and more responsibility to take on the tasks private charities usually handle. A proposed $646 billion energy tax will harm industries that use a lot of energy (like manufacturing), not to mention cost each American household between $650 and $2,000 a year in new energy costs. And Obama’s new “Make Work Pay” refundable tax credit provides up to $400 in cash to low income adults who pay no income taxes, including able-bodied adults without dependent children.
The best way to help Americas economy is to reduce taxes. While high taxes depress an economy, lower taxes reduce the costs of starting new businesses, hiring new employees, and investingall things imperative for jumpstarting an economy. Plus, lower individual income taxes allow Americans to keep more of their own money!
The American Option was introduced in the Senate by Jim DeMint (R-SC) and would have:
reduced business taxes from 35% to 25% to spur rapid growth in wages, jobs, and business incomes.
permanently repealed the Alternative Minimum Tax and reduced the individual tax rate to three levels10%, 15%, and 25%.
given Americans more of their own money to fuel the economy and increased disposable income for an average family of four by up to $4,500 by 2013.
Reducing statutory tax rates, reducing regulatory burdens, and cutting spending would all help get our economy moving again, and should be the focus of Americas economic policy.