The goal of tax policy should be to raise only the amount of money needed to fund legitimate functions of government while doing the least amount of damage to the economy and respecting the principle of treating taxpayers equally.
Tax cuts are just one step toward the ideal of replacing our outdated and complex Federal Tax Code with a modern and simple tax. Through comprehensive tax reform, either a flat tax or a single-rate national sales tax (like the Fair Tax) would spur economic growth, be fairer, and would lower compliance costs. A flat tax, for example, has a low tax rate and eliminates the current Tax Code’s multiple taxes on saving and investment. A flat tax also eliminates special preferences and penalties that lead individuals and businesses too often to make choices based on tax considerations rather than on economic benefits. This is why a flat tax would boost growth. Since a flat tax also is based on the principle that all taxpayers are treated equally regardless of how they earn their income, how they spend their income, or the level of their income, the system is both morally and economically superior to the current Internal Revenue Code.
A national sales tax has similar benefits. It would also dramatically lower compliance costs and bolster economic growth.
Absent comprehensive tax reform, key tax cuts that would improve the economy include:
- Lower or eliminate marginal income tax rates for individuals.
- Lower or eliminate the dividend tax rate.
- Lower or eliminate the individual capital gains tax rate.
- Lower or eliminate the corporate income tax rate.
- Lower or eliminate the estate tax (“Death tax”).
- Pass a Balanced Budget Amendment with a supermajority vote requirement to raise taxes.
Today, Club for Growth released a poll that shows voters overwhelmingly support Congress passing pro-growth policies during the lame duck...