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banyon
06-12-2011, 01:37 PM
Here is the text of former Minnesota Gov. Tim Pawlenty‘s remarks on his economic plan, as prepared for delivery at the University of Chicago.

“A Better Deal”

Economic Policy Remarks

Governor Tim Pawlenty

June 7, 2011

How are you enjoying your recovery Summer? That’s what the President said we were having. And that was last year.

Now — gas is nearly $4 a gallon. Home prices are in the gutter.

Our healthcare system — thanks to ObamaCare — is more expensive. And less efficient.

Unemployment’s back over 9%. Our national debt has skyrocketed.

Our budget deficit has grown worse. And the jobs and manufacturing reports are grim.

If that was a recovery — then our President needs to enter economic rehab. And the American people need to stop his policies. Cold turkey.

The addiction to spending must be brought to a halt. And we must have a President who has a growth agenda. With pro-growth policies I will.

The President wrongly thought the stimulus — the bailouts — and the takeovers were the solution. He says they worked. They did not.

The President is satisfied with a second-rate American economy. Produced by his third-rate policies. I’m not.

I promised to level with the American people. To look them in the eye. And tell them the truth.

I went to Iowa. And said we need to phase out federal ethanol subsidies. I went to Florida. And said we need to raise the retirement age for the next generation. And means-test cost-of-living adjustments for Social Security. I went to New York City. And told Wall Street that the era of bailouts — carve-outs — and handouts had to end.

I’m willing to tell Americans the hard truth. And I believe Americans are ready to hear it.

But the truth about our economy isn’t hard at all. Markets work. Barack Obama’s central planning doesn’t.

America’s economy is not even growing at 2% today. And that’s what all projections say we can expect for the next decade. That’s not acceptable. It’s not the American way.

The recession may have changed our economy. But it didn’t change our character.

The United States is still home to the most dynamic and entrepreneurial people in the world. They’re all around us. Ready to innovate — invest — compete — and create new businesses and jobs. That will mean opportunities for everyone.

They’ve been discouraged and weighed down. By President Obama’s big government. And heavy handed regulations. They deserve a better deal. I’ll give them one. And here it is.

Let’s start with a big — positive goal. Let’s grow the economy by 5%, — instead of the anemic 2% currently envisioned.

Such a national economic growth target will set our sights on a positive future. And inspire the actions needed to reach it.

By the way — 5% growth is not some pie-in-the-sky number. We’ve done it before. And with the right policies — we can do it again.

Between 1983 and 1987 — the Reagan recovery grew at 4.9%. Between 1996 and 1999 —- under President Bill Clinton and a Republican Congress. The economy grew at more than 4.7%.

In each case millions of new jobs were created — incomes rose — and unemployment fell to historic lows. The same can happen again.

Growing at 5% a year — rather than the current level of 1.8% — would net us millions of new jobs. Trillions of dollars in new wealth. Put us on a path to saving our entitlement programs. And balance the federal budget.

How do we do it?

In short — we create more economic growth. By creating more economic freedom.

We should start by overhauling the tax code. Its currently an anti-growth — nine thousand page monstrosity. That’s chock full of special deals for special interests. It’s main goal — seems to be to generate campaign contributions. Not jobs.

American businesses today pay the second highest tax rates in the world. That’s a recipe for failure — not adding jobs and economic growth.

We should cut the business tax rate by more than half. I propose reducing the current rate from 35% to 15%.


But our policies can’t just be about simply cutting rates.They must also promote freedom and free markets. The tax code is littered with special interest handouts — carve-outs — subsidies — and loopholes. That should be eliminated.

Such reform would not only help offset short-term revenue loss from the rate cuts. But it would also reduce cronyism — favoritism — and government manipulating markets for political purposes.

Business success should depend on winning over customers. Not winning over Congressman.

These changes will make American companies immediately more competitive. Investment from around the world will pour into our suddenly inviting market. Creating desperately needed jobs — and opportunities.

But just changing business tax rates isn’t enough. That’s because we know most job growth will come from small and medium size businesses. Typically structured as S corps or LLCs. And their owners are taxed under individual tax rates. Not corporate tax rates.

So — pro-job and pro-growth tax reform — must include individual tax reform as well. Small business owners and hard working Americans need a better deal too. Small businesses should also have the option of paying at the corporate rate.

On the individual rates we need a simpler — fairer — and flatter tax system overall. I propose just two rates — 10% — and 25%.

Under my plan — those who currently pay no income tax would stay at a zero rate. After that — the first fifty-thousand dollars of income or one-hundred thousand for married couples — would be taxed at 10%.

Everything above that would be taxed at 25%. That’s it.

A one-third cut in the bottom rate.To allow younger — middle — and lower-income families to save and build wealth. And a 28% cut in the top rate — to spur investment and job creation.

In addition — we should eliminate altogether the capital gains tax — interest income tax — dividends tax — and the death tax.Government has no moral or economic basis to claim a second share of the same income.

When you deposit a dollar in your bank account. Every penny should be forevermore yours and your children’s. Not the federal government’s.

Once we unleash the creative energy of America’s businesses — families — and individuals — as we did in the eighties and nineties. A booming job market will reduce demand for government assistance. And rising incomes will increase federal revenues.

In the 1980s — revenues increased by 99%. In the 1990s — revenues climbed high enough to balance the budget.

5% economic growth over 10 years would generate 3.8 trillion dollars in new tax revenues. With that — we would reduce projected deficits by 40%. All before we made a single budget cut.

The next part of my plan deals with that other 60%.

A balanced federal budget shouldn’t be a political sound bite. It should be the law of the land.

As one of 49 governors operating with a balanced budget requirement. I balanced 4 biennial budgets in my two terms as governor of Minnesota.

And I know the only reason our legislature ever gave me a balanced budget was because — under our constitution — they had to.

We have to face the truth — Congress is addicted to spending. And that’s true regardless of which party is in control.

The best way, and possibly the only way — to ensure fiscal discipline is to put the Congress in a spending straightjacket.

That’s why I support a constitutional amendment. That not only requires a balanced federal budget. But also caps federal spending as a percentage of our economy. Around the historical average of 18% of GDP.

Only a constitutional amendment has the power to bind future Congresses to keep their promises. Force decision-makers to finally make decisions. And give statutory reforms a chance to succeed.

But passing a constitutional amendment will take awhile. And the crisis that we face is here now. And requires immediate action.

I have and will continue to outline specific proposals to reduce spending — reform government — and balance the budget. As mentioned I’ve already begun that process. With proposals regarding ethanol — entitlements — government employees — and Wall Street.

For example — I’ve proposed capping and block-granting Medicaid to the states. Raising the Social Security retirement age for the next generation. And slowing the rate of growth in defense spending.

But we can’t trust Congress to do it. We cannot allow the situation to risk being unresolved. And take down America’s potential for growth and prosperity.

So — I propose that Congress grant the President the temporary and emergency authority. To freeze spending at current levels. And impound up to 5% of Federal spending. Until such time as the budget is balanced. If they won’t do it — I will.

As an example — cutting just 1% of overall federal spending for 6 consecutive years — would balance the federal budget by 2017.

I know government can cut spending. Because I did it in Minnesota.

I cut state spending in real terms for the first time in our state’s history. We did it with priority-based budgeting. We did it by setting a record for vetoes.

It took a government shutdown. And a long government union strike. But we got it done.

We didn’t close our schools. Or empty out our prisons. We cut spending where it needed to be cut. We can do the same thing in Washington.

Impounding the money should only be a last resort. To force policymakers to finally do their jobs. To cut what we don’t need. To allow us to keep the things we need most.

There’s some obvious targets. We can start by applying what I call “The Google Test.”

If you can find a good or service on the Internet. Then the federal government probably doesn’t need to be doing it.

The post office — the government printing office — Amtrak — Fannie and Freddie were all built for a different time in our country. When the private sector did not adequately provide those services. That’s no longer the case.

What’s more — the same competitive efficiency that revolutionized America’s private sector over the last three decades — should at long last be applied to every corner of the federal bureaucracy as well.

It is no longer enough for government to go on a diet. Government needs to hit the gym.

One efficiency program — Lean Six Sigma — already has a proven track record. Using performance-based management practices to streamline programs at the CIA and the Pentagon. And — as I can personally attest — various agencies of the Minnesota state government.

If we applied this approach throughout all federal agencies — we could save up to 20% in many programs.

Beyond all of this — the real slog of the next administration will be an unrelenting trench battle against the over-regulation. That’s suffocating America’s entrepreneurial spirit.

Conservatives have long made the federal bureaucracy the butt of jokes. And considering that some bureaucrat in Washington is actually in charge of the strength of our showerheads — the vigor of our toilet flushes — or the glow of our reading lamp — it’s hard not to laugh.

But the fact is — federal regulations will cost our economy 1.75 trillion dollars this year alone. It’s a hidden tax on every American consumer. Built into the price of every good and service in the economy.

And make no mistake. The current Administration is hunting far bigger game than the incandescent light bulb.

Under ObamaCare’s individual and employer mandates — America’s private health care market is in intensive care. And the prognosis is bad.

The Dodd-Frank financial regulation bill called for more than 200 new rules. To be written by more than ten federal agencies. None of them resolving the catastrophic scandal of Fannie Mae and Freddie Mac.

Months after the law went on the books —- no one yet knows exactly what the law is.

And the Environmental Protection Agency — is now regulating carbon emissions. A policy rejected by Congress — but putting millions of jobs at risk.

If these policies sound as though they were written by people who have spent no time outside government — well — you’re right. President Obama’s political appointees have been notorious — for their lack of private sector experience.

This is unacceptable.

It”s fundamentally immoral — to force working Americans to hold down two or three real jobs. Just to afford the whims of “experts” — who’ve never had one.

We don’t need ObamaCare to create a one-size-fits-all — government-run health care program. We need Washington to allow a personalized — private health care market to flourish. And meet the diverse needs of individual patients.

We don’t need Dodd-Frank to further intertwine Wall Street and Pennsylvania Avenue. We need to privatize Fannie and Freddie. And remove the threat — that their political slush funds can never again sink our economy.

And we don’t need the unelected officials at EPA — to do what our elected officials in Congress have rejected. We need less EPA monitoring of our economy. And more monitoring of EPA’s affects on our freedom.

I will require sunsetting of all federal regulations. Unless specifically sustained by a vote of Congress. Under my administration — the NRLB will never tell an American company where they can and cannot do business.

Just as the federal government must break down barriers within our domestic markets. We must break down barriers in international markets.

Congress should ratify completed free trade agreements with South Korea — and Colombia. And complete the agreement with Panama. We should start new bilateral talks with our trading partners. To promote our exports.

President Obama set a goal of doubling exports. Yet his policies have prevented this. Mine will achieve it.

Finally — even if we are successful in changing the way Washington taxes — spends — and regulates. Many of the gains we’d realize could be lost by the continued debasement of the dollar. As a result of the loose-money policies of the Fed.

A strong dollar undergirds all that we do for economic growth. Inflation cruelly undermines the life savings — and life prospects of every American.

If we want to give taxpayers — retirees — investors — consumers — and entrepreneurs a better deal — we have to maintain a strong dollar.

No more quantitative easing. No more monetizing debt. No more printing money with reckless abandon

The president and Congress have every incentive to maximize employment. And a limited government — streamlined tax system — and competitive marketplace will give the economy what it needs to do so.

We need monetary policy that is focused like a laser on curbing inflation. And maintaining price stability. That should be the role of the Fed. And nothing more.

America is facing grave challenges. And when times get tough — some politicians try to turn the American people against one-another.

Regrettably — President Obama is a champion practitioner of class warfare.

Elected with a call for unity and hope. He’s spent three years dividing our nation. And fanning the flames of class envy and resentment. To deflect attention from his own failures. And the economic hardship they have visited on America.

But class warfare is not who we are.

I come from a working class background. I didn’t grow up with wealth. But I’ve never resented those who have it.

The top ten percent of income earners already pay more than 70% of income taxes. We could jack that up to 80 or 90% — as President Obama would have us do.

But that’s not the point.While it might make the class warfare crusaders feel better. It wouldn’t create a single job in America. And it would destroy many.

President Obama has had three years to turn things around.

And all we have to show for it is 3.7 trillion dollars more debt. Nearly 2 million fewer jobs. A Congress that hasn’t passed a budget in more than 2 years. A health care takeover he pretends we can afford. And a fiscal crisis he pretends we can ignore.

We’ve tried President Obama’s way — and it has only made the economy worse. Other countries around the world have tried President Obama’s way —- and have met with ruinous results.

We have a choice. Just because we followed ancient Greece into democracy. Doesn’t mean we’re doomed to follow modern Greece into bankruptcy.

The United States has always chosen its own path — culturally — politically — and economically.

For 235 years we’ve taken the road less traveled. The road of liberty. Of self-government. And free enterprise. And it has made all the difference.

America is in trouble. There’s no question. But the frustration and apprehension of the moment doesn’t define us.

Where we are — is not who we are.

We are the United States of America.

We settled the west and went to the moon. We liberated billions of good people from communism, fascism, and jihadism. We’ve lit the lamp of freedom — for the entire world to see.

The strength of our country is our people — not our government. Americans believe our country is exceptional. And they deserve a President who does too.

We can fix our economy. Our people are ready to get back to work. We just need to give them to tools to get there. And get the government out of the way.

Thank you. And God bless America.

http://blogs.wsj.com/washwire/2011/06/07/text-of-pawlentys-speech-on-his-economic-plan/?KEYWORDS=Pawlenty

banyon
06-12-2011, 01:39 PM
Pawlenty Calls His Economic Plan a ‘Stretch

June 12, 2011, 10:38 AM ET

http://s.wsj.net/public/resources/images/OB-OF256_0607pa_D_20110607134152.jpg
Tim Pawlenty speaks about the economy at the University of Chicago on Tuesday, June 7. (Photo by Scott Olson/Getty Images)


By Andrew Ackerman

Former Minnesota Gov. Tim Pawlenty said Sunday that his tax proposal aimed at growing the economy at 5% annually for 10 years is “a stretch plan” and more “aspirational” than easily achievable.


In an appearance on Fox News Sunday, the Republican presidential candidate struck a defensive tone when asked by host Chris Wallace whether his proposal was feasible. Growth has averaged about 1.7% during the past decade and about 3.42% during the 1990s.

“This is a big goal,” Mr. Pawlenty replied. “Is this aggressive and bold? Absolutely. But I don’t buy into the declinist view and attitude of President Obama that we’re going to settle for anemic growth or average growth or that America’s going to be a laggard.”

Mr. Pawlenty unveiled his plan in a speech Tuesday in Chicago, where he argued that lower tax rates would spur the economy to grow by 5% per year, and generate $3.8 trillion in new tax revenues over a decade. He also called for eliminating taxes on capital gains, dividends, interest income and inheritances and slashing federal spending. Democrats criticized the proposal, saying it would only grow the debt.

In the interview Sunday, Mr. Pawlenty repeatedly criticized President Barack Obama for not unveiling his own long-term deficit-reduction plan.

http://blogs.wsj.com/washwire/2011/06/12/pawlenty-calls-his-economic-plan-a-stretch/

chiefzilla1501
06-12-2011, 02:05 PM
I've always thought he was easily the best candidate for a moderate like myself.

I just don't think he can win. Not charismatic enough.

chiefzilla1501
06-12-2011, 02:34 PM
Let me clarify....
I've always felt government should be run by somebody who actually knows how to run a business. Six sigma and accountability for gov't employees. Great ideas.

I've always said I have no problem paying high taxes as long as I get something out of it. I despise paying taxes that go into inefficient bureaucracies and workers who don't work up to their potential. Not that the private sector is even close on any of those, but the problems in the private sector are a different animal.

Okie_Apparition
06-12-2011, 03:19 PM
HIs plan should be to only take a $1 in salary until the economy has turned around. He can then run off to China after 4 years and make a single speech for $7,000,000

Chocolate Hog
06-12-2011, 04:54 PM
This looks like a great plan. Problem is he's hired a lot of Bush people so I'm not sure how serious I can take him.

banyon
06-12-2011, 07:08 PM
This looks like a great plan. Problem is he's hired a lot of Bush people so I'm not sure how serious I can take him.

This is a great plan?

How so?

SNR
06-12-2011, 07:18 PM
This is a great plan?

How so?I don't think it's a great plan at all, but at least he's thinking outside the box in terms of the tax code. There's no way we're going to fix the government revenue problem by sticking to the current code.

We've hashed the "Do rich people need to pay more?" argument for decades now. It still hasn't been solved.

Chocolate Hog
06-12-2011, 07:22 PM
This is a great plan?

How so?

Because the tax system needs to be overhauled and I agree with cutting taxes even on business as long as those loopholes really are closed.

I agree with freezing government pay.

I agree with ending subsidies. I recall Pawlenty talking about how he'd try and do away with Ethanol which is a great idea.

I'm just curious how far he'd go with cuts. The Department of Education needs to go. There needs to be across the board cuts and the Pentagon needs to be audited.

banyon
06-12-2011, 07:26 PM
I don't think it's a great plan at all, but at least he's thinking outside the box in terms of the tax code. There's no way we're going to fix the government revenue problem by sticking to the current code.

We've hashed the "Do rich people need to pay more?" argument for decades now. It still hasn't been solved.

I agree to the limited extent that there are one or two decent proposals, but a "plan" probably needs some realistic projections and not perpetual 5% growth. A plan to cut taxes more than Bush did and no plan to increase revenue or specify cuts will just double down on our already failed fiscal policy.

notorious
06-12-2011, 07:29 PM
Wow.


As a business owner I love the thought of 15% tax rate. I could dump some of that extra 20% into expanding.


Simple.

banyon
06-12-2011, 07:32 PM
Because the tax system needs to be overhauled and I agree with cutting taxes even on business as long as those loopholes really are closed.

Businesses like GE and Bank of America, which pay a near 0% rate as it is will fight to keep their loopholes tooth and nail, so I'm skeptical.

I agree with freezing government pay.

In our present situation, I agree with this proposal also.

I agree with ending subsidies. I recall Pawlenty talking about how he'd try and do away with Ethanol which is a great idea.

I'm not thinking we spend very much federally on this as it is. I think we need to continue research until we can get better energy conversion ratios. If we can't, then I agree we need to abandon it (but not an energy independence policy).

I'm just curious how far he'd go with cuts. The Department of Education needs to go. There needs to be across the board cuts and the Pentagon needs to be audited.

When people say "the Department of Ed needs to go", I wonder what they think all the $ is spent on. What happens to post secondary education in the US with no loans or Pell grants? I think scaling it back is reasonable, but you're going to create a lot of displaced people with abolition.

chiefzilla1501
06-12-2011, 10:19 PM
I agree to the limited extent that there are one or two decent proposals, but a "plan" probably needs some realistic projections and not perpetual 5% growth. A plan to cut taxes more than Bush did and no plan to increase revenue or specify cuts will just double down on our already failed fiscal policy.

I think the important part is that he's talking growth. All businesses set stretch goals. If you don't set stretch goals, you become satisfied with average progress.

I agree in that I'm not a huge fan of major tax cuts. But you have to account for both revenues and expenses. If you spend government dollars more efficiently, you don't have to bring in as much revenue, or more importantly, you can reinvest those savings on things that will further promote growth. More importantly, he has an actual plan for growing the private sector and encouraging small business growth--that's a revenue generator right there. That's why I LOVE the google test. I've always resented that my taxpayer money is paying for a ridiculously inefficient postal service.

banyon
06-12-2011, 10:20 PM
I think the important part is that he's talking growth. All businesses set stretch goals. If you don't set stretch goals, you become satisfied with average progress.

I agree in that I'm not a huge fan of major tax cuts. But you have to account for both revenues and expenses. If you spend government dollars more efficiently, you don't have to bring in as much revenue, or more importantly, you can reinvest those savings on things that will further promote growth. More importantly, he has an actual plan for growing the private sector and encouraging small business growth--that's a revenue generator right there. That's why I LOVE the google test. I've always resented that my taxpayer money is paying for a ridiculously inefficient postal service.

I'm sure that at some point, exactly that phrase was uttered by the people pimping the Bush tax cuts as well.

Ugly Duck
06-12-2011, 11:13 PM
Businesses like GE and Bank of America, which pay a near 0% rate as it is will fight to keep their loopholes tooth and nail

I hear ya... our official corporate tax rate is the 2nd highest among the industrialized nations, but after the loopholes they jump through & the "incentives" that we taxpayers give them, they don't pay anywhere near the "official" rate. After the loopholes, our corporations actually pay a lower rate than India, China, Japan, Germany, Canada, Brazil, and Italy. Pawlenty thinks that paying lower tax rates than India & China is the reason we don't compete with them, but if we pay lower-than-lower rates, we will suddenly compete. Problem is, corporations will probably just continue to pocket the money & continue to exacerbate the country's wealth disparity. Thats now right about where it was before the '29 crash & Great Depression. GE paid zero, Exxon paid zero, etc..... they ain't being stifled by "high" taxes - they're pocketing the money & investing, if anywhere, overseas.

http://static.seekingalpha.com/uploads/2010/2/21/saupload_9_9_09poverty_f1.jpg

Fishpicker
06-13-2011, 12:40 AM
I don't agree with any plan that can be fit into one post. this is more of an outline really.

FAX
06-13-2011, 12:49 AM
The statement that the tax code is designed to generate political contributions - not economic growth - resonates with me.

The land of Pawlenty.

FAX

Cave Johnson
06-13-2011, 09:53 AM
No mention of his plan to eliminate cap gains taxes.....

Also, as always, it's good to be a millionaire. Who could have guessed unlimited campaign contributions would work out well for them.

http://thinkprogress.org/economy/2011/06/08/239462/pawlentys-cuts-millionaires-taxes/

– Taxpayers with incomes in excess of $1 million would enjoy an average cut in personal income taxes of $288,822, a 41.4 percent cut.
– Taxpayers with incomes in excess of $10 million would enjoy an average cut in personal income taxes of $2.4 million, a 46.3 percent cut.
– The cost of the personal income tax cuts just for taxpayers with incomes in excess of $1 million would be $141.8 billion.

AndChiefs
06-13-2011, 09:59 AM
I hear ya... our official corporate tax rate is the 2nd highest among the industrialized nations, but after the loopholes they jump through & the "incentives" that we taxpayers give them, they don't pay anywhere near the "official" rate. After the loopholes, our corporations actually pay a lower rate than India, China, Japan, Germany, Canada, Brazil, and Italy. Pawlenty thinks that paying lower tax rates than India & China is the reason we don't compete with them, but if we pay lower-than-lower rates, we will suddenly compete. Problem is, corporations will probably just continue to pocket the money & continue to exacerbate the country's wealth disparity. Thats now right about where it was before the '29 crash & Great Depression. GE paid zero, Exxon paid zero, etc..... they ain't being stifled by "high" taxes - they're pocketing the money & investing, if anywhere, overseas.

http://static.seekingalpha.com/uploads/2010/2/21/saupload_9_9_09poverty_f1.jpg

Actually, the "lowering" of the rate would probably in effect raise the rate on these large corporations due to all the tax holes they're able to take advantage of.

What it would do is lower the rate for smaller companies (which I believe) would pass more of their savings on into growth and jobs in their companies.

patteeu
06-13-2011, 11:07 AM
Since when are we holding POTUS candidates to a standard of easily achievable, universally acceptable result projections for their economic plans? It will be news the next time a candidate runs on a plan that uses conservative estimates and that includes allowances for bad unintended consequences. It's not news that Pawlenty is selling his policy with rosy estimates.

On the other hand, it may actually be newsworthy that Pawlenty didn't shy away from the fact that some of the assumptions used to evaluate his plan are a stretch. You didn't get that from the Obama team when they were selling Porkulus as a way to keep unemployment capped a 8% or when candidate Obama promised to cut the deficit in half by the end of his first term.

patteeu
06-13-2011, 12:03 PM
This looks like a great plan. Problem is he's hired a lot of Bush people so I'm not sure how serious I can take him.

I agree that it looks like a great plan. I don't think hiring Bush people is so much of a problem. I had my differences with Bush's "compassionate conservatism", but his version of tax reform included a lot of growth oriented meat (e.g. reduced rates for dividends and capital gains) along with the compassionate sugar coating (e.g. increased deductions for dependent children) and you can't necessarily attribute the negative aspects of Bush's vision to all of his underlings. Mitch Daniels worked for Bush, but he's been a pretty good Governor when it comes to budget issues, for example.

I agree to the limited extent that there are one or two decent proposals, but a "plan" probably needs some realistic projections and not perpetual 5% growth.

The 5% growth projection isn't really a part of the plan, it's a part of the evaluation of the plan. The thing I like about the plan is that sustained growth is an objective. IMO, growth should be a higher priority than increasing revenues or cutting spending, although all three probably need to be a part of the solution.

patteeu
06-13-2011, 05:09 PM
I hear ya... our official corporate tax rate is the 2nd highest among the industrialized nations, but after the loopholes they jump through & the "incentives" that we taxpayers give them, they don't pay anywhere near the "official" rate. After the loopholes, our corporations actually pay a lower rate than India, China, Japan, Germany, Canada, Brazil, and Italy. Pawlenty thinks that paying lower tax rates than India & China is the reason we don't compete with them, but if we pay lower-than-lower rates, we will suddenly compete. Problem is, corporations will probably just continue to pocket the money & continue to exacerbate the country's wealth disparity. Thats now right about where it was before the '29 crash & Great Depression. GE paid zero, Exxon paid zero, etc..... they ain't being stifled by "high" taxes - they're pocketing the money & investing, if anywhere, overseas.

http://static.seekingalpha.com/uploads/2010/2/21/saupload_9_9_09poverty_f1.jpg

So you shouldn't have any problem with lowering the rate and eliminating most of the targeted tax breaks (i.e. loopholes) then. You sound like you're warming to the Pawlenty Plan.

Jaric
06-13-2011, 05:22 PM
On the other hand, it may actually be newsworthy that Pawlenty didn't shy away from the fact that some of the assumptions used to evaluate his plan are a stretch. You didn't get that from the Obama team when they were selling Porkulus as a way to keep unemployment capped a 8% or when candidate Obama promised to cut the deficit in half by the end of his first term.
I got that impression that he all but conceded it wasn't likely going to happen, but that if you shoot big and come up a little short, you still got pretty far.

Aka this (minus the demotivational part at the end.)

http://www.filehurricane.com/viewerthumbnails/65200812524PM_ambition.jpg

chiefzilla1501
06-13-2011, 07:30 PM
I'm sure that at some point, exactly that phrase was uttered by the people pimping the Bush tax cuts as well.

Like I said, I'm not a big supporter of tax cuts. But I can tolerate them if it means a truly dedicated approach to demanding more efficient spending. Bush cut taxes and demanded radical increases in spending. You can't do one without the other.

Saul Good
06-13-2011, 07:40 PM
I'm sure that at some point, exactly that phrase was uttered by the people pimping the Bush tax cuts as well.

Is the lowering of the rate while eliminating deductions really a tax cut?

chiefzilla1501
06-13-2011, 07:44 PM
No mention of his plan to eliminate cap gains taxes.....

Also, as always, it's good to be a millionaire. Who could have guessed unlimited campaign contributions would work out well for them.

http://thinkprogress.org/economy/2011/06/08/239462/pawlentys-cuts-millionaires-taxes/

– Taxpayers with incomes in excess of $1 million would enjoy an average cut in personal income taxes of $288,822, a 41.4 percent cut.
– Taxpayers with incomes in excess of $10 million would enjoy an average cut in personal income taxes of $2.4 million, a 46.3 percent cut.
– The cost of the personal income tax cuts just for taxpayers with incomes in excess of $1 million would be $141.8 billion.

That's such a simple argument.

What's providing more of a cost to the system? Forcing taxpayers to pay for public sector workers who are pissing away gov't money because there's no accountability? Forcing taxpayers to pay for special interests and ridiculously unnecessary and exorbitant union activities that provide subtract significant value for the taxpayer?

Or is it the rich getting tax cuts?

My opinion is it's a little bit of both. But for my money, if I want to guarantee collection of tax dollars, I believe it's a hell of a lot easier to demand more bang for the taxpayer buck than to try to convince a rich person to not use tax loopholes.

patteeu
06-14-2011, 05:45 AM
That's such a simple argument.

What's providing more of a cost to the system? Forcing taxpayers to pay for public sector workers who are pissing away gov't money because there's no accountability? Forcing taxpayers to pay for special interests and ridiculously unnecessary and exorbitant union activities that provide subtract significant value for the taxpayer?

Or is it the rich getting tax cuts?

My opinion is it's a little bit of both. But for my money, if I want to guarantee collection of tax dollars, I believe it's a hell of a lot easier to demand more bang for the taxpayer buck than to try to convince a rich person to not use tax loopholes.

Tax loopholes are generally there because at some point in the past, Congress decided that they wanted to provide an incentive for some particular behavior. So it's kind of strange to be talking about trying to convince people not to use them, when they're there in order to convince them to do the opposite.

BTW, we should all keep the concern over "loopholes" in mind the next time a politician talks about "targeted tax cuts" because they are two sides of the same coin.

Amnorix
06-14-2011, 06:40 AM
Is the lowering of the rate while eliminating deductions really a tax cut?

Depends on how it works out net net, which is hard to predict in the abstract.

Amnorix
06-14-2011, 06:43 AM
I'm for a more rational fiscal policy. By "rational", I mean "something that doesn't result in bankrutpcy". I'm stunned that America's politicians continue to drive the same old train on the same old tracks that are headng right for that gorge where the bridge is out, and play politics over whether the cushions in Car 4 should be striped or solid, and who was responsible for the food being a bit cold in the Dining Car.


:banghead:

notorious
06-14-2011, 07:11 AM
Is the lowering of the rate while eliminating deductions really a tax cut?

Tax Cut = I can spend my money anywhere


Keep Deductions = I can only spend my money on business to see that money



Deductions basically force a business to spend money or they will get killed on taxes. Tax cuts would allow us to save money or spend it in our personal lives.

FD
06-14-2011, 11:51 AM
Bruce Bartlett has a nice article today, using the Pawlenty plan as a starting point, then discussing what economists know about how to promote long term GDP growth:


What Really Matters for Growth

By BRUCE BARTLETT, The Fiscal Times
June 10, 2011
When Republicans talk about economic growth, they tend to talk as if there is only one factor that affects it: tax rates. Thus, last week former Minnesota Gov. Tim Pawlenty, a candidate for the Republican presidential nomination, put forward an economic plan that he said would raise growth rate of the real gross domestic product to 5 percent per year from its historical level of about half that. His only specific proposal for achieving this ambitious goal was to slash tax rates on the wealthy.

Pawlenty would cut the top individual income tax rate from 35 percent to 25 percent, cut the corporate rate from 35 percent to 15 percent, and eliminate completely all taxation of capital gains, interest and dividends – the principal sources of income for the wealthy. Implausibly, Pawlenty asserted that despite reducing revenues by some $8 trillion over the next 10 years – from the lowest level of federal revenues as a share of GDP in 60 years – that his plan would balance the budget. I could find no data or analysis of how Pawlenty’s plan would actually achieve this goal.

My purpose today is not to criticize the particulars of Pawlenty’s plan, which is very much in the Republican mainstream, but rather to talk about the nature of economic growth and how one-dimensional the GOP view is. The truth is that economists know a lot about what causes growth and what policies will raise the growth rate, and tax rates have a far smaller role than most people and all Republicans believe.

To present the textbook view of what determines long-term economic growth, I turned to an actual textbook by Harvard economist Gregory Mankiw, who served as chairman of the Council of Economic Advisers for George W. Bush.

Mankiw begins by noting that economic growth is essentially a function of productivity – output per man-hour. How much a worker can produce is a function of several things: physical capital (machines, equipment, public infrastructure), human capital (education and training), natural resources (energy, land), and scientific and technological knowledge.

The key determinant of the amount of capital available to workers is saving – foregone consumption from current production. In general, more saving will lead to more investment, and more investment will raise productivity and growth.

Economists have spent many years trying to figure out how to increase the rate of saving, without much success. Insofar as individuals are concerned, their saving is largely determined by the need to save for retirement, get the down payment on a house, pay for their children’s education, and have a financial cushion for unforeseen circumstances. These are all things people would have to save for even if they got no return on their savings at all. Consequently, reducing the tax rate on saving is very unlikely to raise the personal savings rate. Research on the impact of tax-favored savings accounts, such as Individual Retirement Accounts and 401(k) plans, shows that people mostly shift their saving and don’t increase the total amount. Of vastly more importance, economically, is saving and investment by businesses and governments.

What matters for business investment is not the corporate tax rate, but the ultimate tax rate on capital including the tax on the corporation’s owners, the shareholders. In 2003, that was almost 58 percent – 35 percent at the corporate level and as much as 35 percent at the individual level. Now, that combined rate is at most 45 percent because in 2003 the tax rate on dividends was reduced to a maximum of 15 percent.

Unfortunately, there’s no evidence that the 2003 tax cut did anything to stimulate corporate investment. Indeed, according to the Federal Reserve, nonfinancial corporations have increased their holdings of liquid assets to $1.8 trillion from $1.2 trillion since 2003. Thus it’s implausible that a further reduction in the corporate rate, as Pawlenty and other Republicans favor, would do much to raise investment.

What is holding back business investment is not taxes, but poor economic prospects. For some time, members of the National Federation of Independent Business have listed “poor sales” as their number one problem. Businesses are not going to invest, no matter how low the tax rate is, if there is no demand for their output.

Government mainly affects savings not so much through tax rates as through the budget deficit, which constitutes negative saving. When government borrows, it takes funds out of the economy that would otherwise be available to finance domestic investment. Alternatively, the U.S. must borrow more from foreigners, which increases the trade deficit. In the national income and product accounts, the trade deficit is subtracted from GDP, thus lowering growth.

The bottom line is that neither taxes nor spending by themselves are the most important government contribution to the investment climate; it’s the budget deficit. Consequently, a reduction in tax revenue which raises the deficit is unlikely to stimulate domestic investment because more money will have to be borrowed from abroad. Conversely, a tax increase dedicated to deficit reduction could well be stimulative, as was the case with the 1982 and 1993 tax increases. Contrary to Republican dogma, rapid growth followed on both occasions.

A big cut in the budget deficit would be destabilizing in the short-run, but a reduction in the long-term deficit would free up more national saving for private investment. But if taxes are cut at the same time, as Republicans insist, then the economic consequences are ambiguous. With federal taxes at a historical low – they are currently just 14.8 percent of GDP versus a postwar average of about 18.5 percent – it’s implausible to argue that further tax cuts will stimulate growth. Indeed, there is good reason to think that undermining the government’s ability to raise revenue will raise prospects for future deficits, which will drain saving from the economy and reduce investment. For this reason, I am also very skeptical of the idea just floated by the White House to further cut the payroll tax.

If we want to raise the long-term rate of growth, we have to go back to the textbook and increase saving and investment, channel more public investment into education and basic infrastructure, and do everything in our power to promote scientific research and technological advancement. It’s not sexy and it takes a lot of time, but it works.

http://www.thefiscaltimes.com/Columns/2011/06/10/What-Really-Matters-for-Growth-Its-Not-Tax-Rates.aspx

patteeu
06-14-2011, 03:39 PM
Robert Samuelson had a good article that essentially said that economists claim to know more than they really do and that our current sluggish recovery is partly the result of disillusionment with policy prescriptions from economists.

http://www.realclearpolitics.com/articles/2011/06/13/hunkered-down_america_110170.html

Dave Lane
06-14-2011, 03:46 PM
I propose 10% economic growth me getting 1 trillion a year salary, unlimited use of Hubble and a good paying job for everyone else. Who's with me!

I can do this!! Yay!!!!111!!!!1!

Calcountry
06-14-2011, 05:08 PM
I'm sure that at some point, exactly that phrase was uttered by the people pimping the Bush tax cuts as well.Why hasn't your bitch raised taxes?

Calcountry
06-14-2011, 05:47 PM
Robert Samuelson had a good article that essentially said that economists claim to know more than they really do and that our current sluggish recovery is partly the result of disillusionment with policy prescriptions from economists.

http://www.realclearpolitics.com/articles/2011/06/13/hunkered-down_america_110170.html

It struck me at a graduate school mixer to meet the faculty, just exactly how much dissension there was in the school of economics. It was like they were at a job fair waiting to recruit all of the new meat into their prospective schools of thought.