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The only reason why I am mentioning this plan is the sheer ridiculousness of its foundation. In his editorial in the Wall Street Journal today, Santorum announces that he will pay for his tax plan by “repealing ObamaCare and all of its associated taxes.” That is patently absurd. No matter how much I may dislike Obamacare, the likelihood that it will be entirely repealed is slim to none. To stake an entire tax plan (flat tax at that) on something likely to be unattainable, is a bit foolish and naive.
You can read the plan below in its entirety:
Since 2007, 15,000 American factories have shut down and more than two million manufacturing jobs have been lost. Wages have flatlined; American families are struggling.
In every recovery since 1960, real GDP grew by 4% a year, according to a report from the Congressional Joint Economic Committee. The Obama-Biden policies have resulted in a paltry 2.3% annual growth since the recession ended in 2009. This growth gap has cost the country $5.4 trillion in lost economic output and 5.5 million fewer jobs than would have been expected during a normal recovery.
So what is Hillary Clinton’s vision to get the economy moving? She wants to slam investors with higher capital gains taxes. Bernie Sanders wants to raise the top personal-income tax rate to 90%.
Donald Trump’s plan to make America great again? He’s offering a complicated tax cut that the Tax Foundation reports will explode the deficit by more than $10 trillion over a decade. Are any Republicans offering serious, specific proposals to scrap the toxic tax code? Jeb Bush wants three rates. Marco Rubio wants two. Rand Paul has proposed a single rate and creating a European-style value-added tax.
America deserves better. That’s why, in my first 100 days as president, I will submit to Congress a comprehensive Economic Freedom Agenda that will abolish the existing tax code. Under “The 20/20 Flat Tax: A Clear Vision For America,” individuals will pay a simple, low 20% individual rate that will be applied to all streams of income. It eliminates the marriage penalty, death tax and alternative minimum tax. It will treat every American the same. No longer will savings and investment be penalized.
Individuals will receive a $2,750 credit, which will replace the standard deduction and personal exemption. The credit will be refundable and replace the Earned Income Tax Credit. The child tax credit will remain. For low- and middle-income workers, the provision will shield much of their basic wages from federal income taxes. They can keep more of what they earn.
In exchange for the refundable tax credit and low rate, itemized deductions will be eliminated, except for two. Charitable giving in any amount will be fully deductible, to affirm and encourage Americans’ generosity. Mortgage interest—up to $25,000 a year—will also be deductible, as a means of helping low- and middle-income workers buy and maintain their family home without subsidizing millionaires and billionaires.
Businesses too will benefit from a flat 20% tax rate. It will replace the current corporate income-tax rate of 39.1% that is only exceeded by Chad and the United Arab Emirates. An initial 0% tax rate on American manufacturers, phasing up to 20% over two years, will help make America the No. 1 manufacturer in the world again.
Companies will be allowed to deduct 100% of their capital costs in the first year. Full expensing will eliminate complicated depreciation schedules and encourage investment in new plants and equipment. To encourage American companies to bring revenues home and reinvest the $2.1 trillion in profits that have been parked overseas, my plan calls for a low 10% rate on business income that is repatriated.
I will eliminate the deductibility of interest and corporate welfare, including all carve-outs, loopholes and tax shelters. No more special deals and favors for the rich and powerful and their lawyers and lobbyists.
An analysis of my plan by the Tax Foundation found that GDP would rise by 10.2% above the Obama-Biden trajectory over 10 years. Capital investment would grow by almost 30% and wages would increase by 7.3%. More than 3.1 million additional jobs would be created beyond current projections.
I will pay for my plan by repealing ObamaCare and all of its associated taxes. My flat tax will reduce federal revenues by $1.1 trillion over 10 years, after accounting for increased GDP growth and job creation. But according to the Congressional Budget Office, repealing ObamaCare will reduce federal spending by $1.7 trillion over 10 years and increase economic growth by 0.7% annually.
Thus, the 20/20 Flat Tax will not increase the deficit. It will allow us to make needed reforms, such as the expansion of Health Savings Accounts, to give patients and doctors, not Washington bureaucrats, more freedom and control over their health care, and to expand coverage. The new tax code will also provide the resources needed to rebuild our military in an increasingly volatile world.
To maximize the country’s economic potential I will, on my first day in office, repeal each and every Obama-administration regulation that creates an economic burden of more than $100 million. The Keystone XL pipeline will be approved, and expanded production of domestic fuels will be encouraged, not hobbled by federal regulations.
As a U.S. senator I never voted for a tax increase, and the first two bills I co-sponsored were the Balanced Budget Amendment and the Line Item Veto. I always fought for bold tax cuts and government reform. My administration will be no different.
The stakes for America are too high for the GOP to nominate untested newcomers, first-term senators, or governors without proven national results. I offer Americans a clear conservative vision, serious plans for reform and the experience to get the job done.
Mr. Santorum, a former U.S. senator from Pennsylvania, is a Republican candidate for president.
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This is an point that I have been writing about for years: workers in the public sector makes more than their private sector counterparts, especially when benefits are factors into the compensation package.
Now, a new study by CATO affirms my supposition. CATO analyzed data from the US Bureau of Economic Analysis (BEA) and found that “that federal government workers earned an average of $84,153 in 2014, compared to the private sector’s average of $56,350.”
Even more incredibly, “when adding in benefits pay for federal workers, the difference becomes more dramatic. Federal employees made $119,934 in total compensation last year, while private sector workers earned $67,246, a difference of over $52,000, or 78 percent.”
Government wage increases vastly outpaced the public sector, and the number of government jobs have soared. For the federal government alone, there are 2.1 million workers, “costing over $260 billion in wages and benefits this year.”
It is interesting to ponder the secondary effects of this phenomenon. First, as the amount of government jobs increases, the amount of voters with government jobs increases. What voter is going to seriously vote to cut the size and scope of government when he is the direct beneficiary. Likewise as pay continues to grow, it becomes less likely that someone will vote to cut his or her own pay.
At some point, the number of voters with government pay and benefits will outnumber those without. When that happens, we’ve reached the tipping point with trying to reign in government spending.
by | BLOG
Remember, Obamacare mandates that you either have an approved insurance plan OR pay a penalty/fine/tax. The 2014 tax year was the first year year the penalty was assessed. This coming tax year, the penalty increases, and for tax year 2016, the penalty increases even more. Here’s how the penalty works:
“Your tax is the greater of either 1) a flat-dollar amount based on the number of uninsured people in your household; or 2) a percentage of your income (up to the national average cost of a Bronze plan , as determined by the IRS and adjusted annually to reflect changes in premiums).
This means wealthier households will wind up using the second formula. For example: in 2016, an individual earning less than $37,000 would pay just $695 (flat-dollar calculation) while an individual earning $200,000 would pay about $4,750 (2.5% of his income above the tax filing threshold). (Hat tip to the Congressional Research Service.)
1) Flat-dollar amount
In 2014, the flat-dollar penalty is $95 per uncovered adult (rising to $325 in 2015, and $695 in 2016) plus half that amount for each uninsured child under age 18. Your total household penalty is capped at three times the adult rate, no matter how many children you have. In 2014, that’s $285 ($975 in 2015, and $2085 in 2016).
2) Percentage of income
In 2014, the penalty is 1 percent (rising to 2 percent in 2015, 2.5 percent in 2016). The penalty is capped at the average cost of a Bronze plan, which for 2015 is $2,484 for an individual and $12,420 for a family of five; this cap will adjust annually. Wealthy households will be happy to know that they will pay a penalty only on that portion of their adjusted gross income “above and beyond their filing threshold,” explains the Center on Budget Policy and Priorities‘ Judy Solomon.”
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From the AP:
A sagging global economy has finally caught up with the United States.
Nervous employers pulled back on hiring in August and September as China’s economy slowed, global markets sank and foreigners bought fewer U.S. goods. Friday’s monthly jobs report from the government suggested that the U.S. economy, which has been outshining others around the world, may be weakening.
Lackluster growth overseas has reduced exports of U.S. factory goods and cut into the overseas profits of large companies. Canada, the largest U.S. trading partner, is in recession. China, the second-largest economy after the United States, is growing far more slowly. And emerging economies, from Brazil to Turkey, are straining to grow at all.
A result is that economists now expect the Federal Reserve to delay a long-awaited increase in interest rates, possibly until next year.
Employers added just 142,000 jobs in September, and the government sharply lowered its estimate of gains in July and August by a combined 59,000. Monthly job growth averaged a mediocre 167,000 in the July-September quarter, down from 231,000 in the April-June period.
The unemployment rate remained a low 5.1 percent, but only because many Americans have stopped looking for work and are no longer counted as unemployed. The proportion of adults who either have a job or are looking for one is at a 38-year low.
U.S. stock prices have tumbled as fears of a global slowdown have intensified. Volatile financial markets can make businesses too anxious to expand and hire.
“We’re back to a period of what I call corporate caution,” says Nariman Behravesh, chief economist at IHS. “It’s wait and see. If things stabilize, we could see hiring come back.”
On Friday, the Dow Jones industrial average fell about 200 points soon after the jobs report was issued before recovering to close up 200. The yield on the 10-year Treasury note dipped below 2 percent, a sign that investors anticipate sluggish growth and low inflation.
Over the past year, the dollar has risen about 15 percent against overseas currencies, making U.S. goods costlier overseas and imports cheaper. Declining exports have led many analysts to slash their growth estimates for the July-September quarter to a subpar 1.5 percent annual rate or less.
Heavy equipment maker Caterpillar has said it will cut up to 5,000 jobs by year’s end. Lower oil prices have hurt its sales of drilling equipment, and overseas sales of its construction machines have fallen.
Hershey has said it will shed 300 positions in the U.S. this year after sales in China plunged.
A host of other companies have announced layoffs in recent weeks, including Wal-Mart, the world’s largest retailer; ConAgra Foods, which makes Chef Boyardee and Slim Jims; and Chesapeake Energy, which has been hurt by lower oil prices.
The tepid pace of hiring clouds the picture for the Fed, which is considering whether to raise rates from record lows. Fed Chair Janet Yellen has said that the job market is nearly healed. But she’s also said she wants to see further hiring and pay growth for reassurance that inflation is edging toward the Fed’s 2 percent target. Average hourly wages are up just 2.2 percent in the past year – far below the 3.5 percent or 4 percent considered healthy.
Many economists now expect no rate hike until 2016, though some still think the Fed will begin raising rates in December – a step that would eventually send consumer and business borrowing rates up.
Some analysts, like Michael Gapen, chief U.S. economist at Barclays Capital, say they remain confident in the economy’s resilience. Gapen notes that the threats from overseas resemble earlier periods in the economic recovery when anxiety about Europe’s financial crisis slowed hiring and roiled U.S. markets.
He says he thinks underlying drivers of the U.S. economy are healthier now and can power through overseas pressures.
“The consumer is in much better shape, and the housing sector is in better shape,” Gapen said. “This is something that is more of a soft patch,” rather than a “meaningful recession risk.”
Some Americans are still willing to splurge out on pricey goods: Auto sales surged to the highest level in a decade last month, and sales of new homes reached a seven-year high in August.
The disparity between overseas weakness and solid consumer spending was evident in the September jobs report: Manufacturers shed jobs for a second straight month while retailers, restaurants and hotels all added positions.
Central banks in China and Europe could take further steps this year to stimulate growth. And most expect growth in Germany to pick up next year. That could lessen the threat from overseas.
Still, the sluggish growth of the U.S. labor force – the number of people either working or looking for work – poses a headwind for job growth. The aging population means more baby boomers are retiring.
The decline in the proportion of Americans in the workforce also signals that many remain discouraged about their job prospects. Modest growth and steady, if unspectacular, hiring haven’t encouraged lots more people to look for work.
