Presidential hopeful Newt Gingrich has proposed a new “Contract with America”. Undeterred with his low poll numbers, vanishing campaign war chest, or any serious attention being paid his campaign by anyone, Newt has rolled out what could be the platform for any of the other GOP candidates.
There is the usual, like “Repeal ObamaCare” (of course with no explanation of why or details of what would replace it. Therefore there is no reason to expect Newt’s ideas might have any chance at health care cost control.) Oh, and don’t forget he is going to free up America’s productive energies and create jobs. He doesn’t say it but his prose would lead you to believe there will be a job in every pot.
You can pretty much sum up Newts views with his “Jobs and Prosperity” plan. In this bold promise, Newt promises to do four things. They are
(1) Reduce the Corporate Tax to 12.5%
(2) Abolish the Capital Gains Tax.
(3) Abolish the Death Tax.
(4) 100% Expensing. (This allows companies to deduct from their taxes the full amount of their annual investment… read lower taxes).
The most favorable light that can be cast upon these proposals is they are the best of supply side economics. If we make it, people will buy it. While a little of that idea is always useful, expecting a lot to work even better is like “will you love me in the morning”.
A far more realistic view of Newt’s proposals is to ask, “just who would these benefit the most?”
You can have two choice, “the already wealthy” or “everyone else”.
Corporations are not going to hire more people even if the tax rate was zero. They would be far more likely run up their profits and take their reward from Wall Street with stock price appreciation. Then with no capital gains tax (thanks to Newt), share holders and senior executives could say, this is truly a “prosperous” moment.
The “death tax”, of course, has nothing to do with jobs and everything to do with the very wealthy passing their wealth onto their descendants. While there may be reasonable grounds to discuss the threshold value of where an “estate tax” should kick in, zero is hardly fair to all Americans.
Newt’s new toot may sound alluring to some. It is however hollow at best and disingenuous at the extreme. Americans, especially the broad middle class need to recognize there is nothing in this man’s proposals that will narrow the widening gap between the wealthy and everyone else.
Consequently, the American dream will get more and more illusive for you and your children if we follow Newt’s New Toot.