I was watching a YouTube video by Newt Gingrich where he said to "throw out the tax code and replace it with one that is simple and fair." So I went to his website at newt.org to look at his tax reform plan. I would like to share my opinion on the Newt Gingrich tax "simple and fair" tax plan compared to the Fair Tax.
Make the United States the most desirable location for new business investment through a bold series of tax cuts, including: Eliminating the capital gains tax to make American entrepreneurs more competitive against those in other countries; The Fair Tax would bring the capital gains tax to zero too - so far so good
Dramatically reducing the corporate income tax (among highest in the world) to 12.5%; Allowing for 100% expensing of new equipment to spur innovation and American manufacturing; The Fair Tax would bring the corporate tax rate to zero -- 12.5% for the Gingrich plan? If 12.5% is good I think zero would be better!
Remember businesses do not pay taxes -- a business only collects taxes (plus compliance costs) from the consumer and passes your money on to the government.
Ending the death tax permanently. The Fair Tax does this also
Excerpt: Move toward an optional flat tax of 15%
that would allow Americans the freedom to choose to file their taxes on a postcard, saving hundreds of billions in unnecessary costs each year. This optional flat tax system will preserve deductions on charitable giving and home ownership, and create a new personal deduction of $12,000 for every American. The optional Flat Tax means we keep our current income tax code and add a second "optional flat tax code" on top or the current tax code -- do we really need more pages of tax code? The Fair Tax also means you take home your paycheck free of federal withholding thus you make donations to charity with money that has never been taxed. Your entire mortgage payment, credit card payment and car payment will also be paid in pretax dollars.
This deduction is well above the current poverty level, ensuring that this new system does not unfairly target the poor. This part is a mystery to me because most poor people pay more in Social Security and Medicare taxes than income taxes. The taxes on Social Security and Medicare are not mentions but if they remain the same that means the 15% income rate plus the 15.5% payroll taxes equals a 30.5% tax rate -- far ahead of the 23% Fair Tax rate.
Also it appears the Gingrich plan does not protect your privacy, you still need to report your income to the government. Under the Fair Tax your income, spending, and savings are none of the government's business
My 2 cents,