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Newt Gingrich on Tax Reform

Former Republican Representative (GA-6) and Speaker of the House


Flat tax at 15%; reduce government to make that work

Q: What is the highest federal income tax any American should have to pay? We are looking for a number.

PERRY: Seven percent flat tax. Simple. Keep it simple.

SANTORUM: Well, my plan has two rates, 10 and 28 percent, which is the highest rate under Ronald Reagan when he cut taxes.

ROMNEY: I would like 25 percent, but right now it's at 35, so people better pay what is legally required. But ultimately let's get it down to as low as we possibly can, if it's 20, if it's 25 but paying more than 25 percent, I think, is taking too much out of our pockets.

GINGRICH: I would like to see it be a flat tax at 15 percent and I would like to see us reduce government to meet the revenue, not raise revenue to meet the government.

PAUL: Well, we should have the lowest tax that we've ever had, and up until 1913 it was 0%. What's so bad about that?

Source: Fox News debate on MLK Day in Myrtle Beach, SC , Jan 16, 2012

Obama divides us by going after people who make over $250K

GINGRICH: [to Romney]: One of the characteristics of Obama in his class-warfare approach has been to talk about going after people who made over $250,000 a year and divide us. On about page 47 of your plan you have a capital-gains tax cut for people unde $200,000, which is actually lower than the Obama model. Now, as a businessman, you know that you actually lose economic effectiveness if you limit capital-gains tax cuts only to people who don't get capital gains. So I'm curious: What was the rationale for setting an even lower base mark than Obama had?

ROMNEY: Well, the reason for giving a tax break to middle-income Americans is that middle-income Americans have been the people who have been most hurt by the Obama economy. People are having a hard time making ends meet. And so if I'm going to use precious dollars to reduce taxes, I want to focus it on where the people are hurting the most, and that's the middle class.

Source: 2011 GOP debate at Dartmouth College, NH , Oct 11, 2011

Obama's "balanced approach" is code for raise taxes

Q: As president, how will you avoid continually raising the debt ceiling?

Gingrich: We don't need Obama's "balanced approach" (code for raise taxes). We need a balanced budget.

Santorum: Pass the Balanced Budget Amendment and work for its ratification across the country!

Gingrich: When you balance the budget there is no need to raise the debt ceiling. I am the only candidate who has balanced the budget.

Johnson: I'd avoid continually raising the debt ceiling by not incurring more debt! I'd submit to Congress a balanced budget in 2013, & veto any appropriation that exceeds that budget.

Santorum: DC doesn't work; we need to impose discipline on politicians who want to buy their reelection with your money. BBA is the only way.

Gingrich: We can balance the budget again by growing the economy, cutting spending and reforming government. That's how we did it before. We CAN do it again.

Source: 2011 Republican primary debate on Twitter.com , Jul 21, 2011

Death tax is a direct assault on civil society

Expansive government rapidly becomes expensive government, and that requires new and higher taxes. The transfer of money from citizens to the bureaucracy then further weakens civil society & leads to even more expensive & even more expensive government. That effort to finance Big Government through higher taxes is a direct assault on civil society, and the "death tax" is a prime example. This tax, which is in a constant state of flux and was resurrected in 2001 after effectively disappearing in 2010, falls especially hard on small business. That sector contributes immensely to America's social and economic dynamism, often acting as the cornerstone of community organizations and local philanthropy. Entrepreneurs and shopkeepers are community leaders and, when prosperous, are generous with their time and money. Prosperity and generosity are highly correlated, as those with more to give feel obliged to give more.
Source: A Nation Like No Other, by Newt Gingrich, p.129-130 , Jun 13, 2011

Energy taxes are taxes on people earning under $250K

I looked at the budget yesterday which has a $640 billion revenue item from energy tax. I thought to myself; let me get this straight, we're not going to raise taxes on anyone below $250,000 a year unless you use electricity. And we're not going to raise taxes on anyone under $250,000 a year unless you buy gasoline, and we're not going to raise taxes on anyone under $250,000 unless you buy heating oil, and we're not going to raise taxes on anyone under $250,000 a year unless you use natural gas.
Source: Speech to 2009 Conservative Political Action Conference , Feb 27, 2009

Match the Chinese and have zero capital gains tax

Why don't we match the Chinese and have zero capital gains tax? Now, when you go back home to try to explain this you don't have to explain anything complicated. Just find people with a 401K or a pension plan, or a savings account for their children to g to college and say to them: How would you like for that to be 20-40% more valuable in a few weeks? That's what eliminating the capital gains tax would do. Because suddenly, people put capital back in the market, the market would rise in value.
Source: Speech to 2009 Conservative Political Action Conference , Feb 27, 2009

Voted against Reagan tax increases & Bush tax increases

I think we need to get independent from this leader fascination with the presidency. I voted against two Reagan tax increases. I voted against George H. W. Bush's 1990 tax increase. It is a totally honorable and legitimate thing to say I am going to support the candidate and oppose the policy. This idea [is] that I think we [did] Pres. George W. Bush a grave disservice by not being dramatically more aggressive in criticizing when they were wrong, and being more open when they were making mistakes.
Source: Speech at 2008 Conservative Political Action Conference , Feb 9, 2008

Flat tax proposal criticized for losing popular tax breaks

Four out of five Americans would like to have the option of a one-page tax form with a single tax rate. This concept of an optional flat tax rate was developed by Steve Forbes when his flat tax campaign was undermined by criticisms that it would take away popular tax breaks. Forbes proposed giving American taxpayers an opportunity to choose simplicity versus complexity and a single rate over a lot of deductions. They call it the free choice flat tax, and it's an idea whose time has come.

All workers and corporations would have the freedom to choose each year to file their income taxes either under the new free choice flat tax option or under the current US income tax code.

Rhode Island adopted an optional flat tax, and lawmakers there expect that it will make the state more competitive with neighboring states in attracting new business and entrepreneurs who create jobs.

Source: Real Change, by Newt Gingrich, p.143-144 , Dec 18, 2007

Tax hikes retard growth and depress revenues

    What we learned in 1995, and what we must recognize today, is that there are four key principles to achieving a balanced budget:
  1. Cut taxes to increase economic growth and therefore increase revenues. It may seem counterintuitive--and it certainly is to elite editorial writers--but cutting taxes to increase economic growth is the best long-term strategy for balancing the budget. Tax hikes retard economic growth and depress revenues.
  2. Set priorities and increase spending in key areas while reducing it in non-essential areas.
  3. Eliminate pork barrel spending. One of the reasons I strongly favor a balanced budget commitment is because it disciplines politicians.
  4. Shift from expansive, wasteful systems to smarter spending. Modern corporations that achieve success do so by being smarter and more productive, not just by being cheaper.
Source: Real Change, by Newt Gingrich, p.178-181 , Dec 18, 2007

Change tax policies to make US companies competitive abroad

We need to change our tax policies to make American companies more competitive around the world. One example is the tax incentives for corporate headquarters location. There was a significant tax advantage for Daimler to acquire Chrysler but there was a significant disadvantage for Chrysler to acquire Daimler. By remaining blind to the consequences of our tax code, we are favoring market forces that will gradually lead to more takeovers of American companies by foreign firms (e.g. Siemens taking over Westinghouse). The European Union now blocks American mergers even between American companies (e.g., Honeywell & General Electric). If we want the US to be the multinational headquarters of the world, we are going to have to rewrite our tax laws so that there are no tax disadvantages to an American firm acquiring an overseas competitor. Moreover, we might want to consider creating an incentive for American firms to make acquisitions so the US becomes the center of executive talent in the world.
Source: Gingrich Communications website, www.newt.org, “Issues” , Sep 1, 2007

Create tax incentives that encourage R&D

We should create tax incentives that encourage research and development. The 50 percent research and development tax credit should be made permanent and be applied to companies that are willing to take on government’s “grand challenges” (for example, the first inhabitable moon base). Investments in new technology and machinery should also be expensed 100 percent in the first year. The present complex code of depreciation makes no sense in a time of rapid change. It is better to encourage overinvestment in new technology and new machinery to keep American workers at the cutting edge of opportunity. Our goal should be to ensure that American workers have newer, better, and more productive equipment than their foreign counterparts.
Source: Gingrich Communications website, www.newt.org, “Issues” , Sep 1, 2007

Eliminate the capital gains tax to encourage investing

We must eliminate the capital gains tax to encourage investing. Federal Reserve Chairman Alan Greenspan testified that the most economical rate for taxing capital gains is zero because tax-free capital gains will encourage much greater risk-taking and lead to more entrepreneurial behavior. This leads to more prosperity, a bigger economy, and better jobs.
Source: Gingrich Communications website, www.newt.org, “Issues” , Sep 1, 2007

Opposing taxes is a key conservative value

One of the key values of most conservatives is opposition to tax increases. This is not only right in itself, but helpful as well, because it protects us from all sorts of temptations that the liberals love to place before us. Conservatives are elected by taxpayers who believe they already pay too many taxes, who want smaller and more efficient government, and who wish to be able to keep more of the money and property they have earned by the sweat of their brows. They feel betrayed when their own leaders are maneuvered into supporting bigger and ever more intrusive government by agreeing to raise taxes. If they wanted that, they would have voted for the liberals in the first place.
Source: Lessons Learned the Hard Way, by Newt Gingrich, p. 25-26 , Jul 2, 1998

Input of public judgement for any major tax reform

The principle of keeping the people on it all the way is my contribution to the great tax reform debate. Some intelligent and persuasive people want a flat income tax. Some other intelligent and persuasive people want to see a sales tax replace any income tax. So my goal in the great tax reform debate is to make sure that it is carried way beyond the experts and advocates and gets a thorough airing in the minds of the voters. I want them to tell me what they think about this question. There is a distinction between public judgment and public opinion. The latter is what people tell pollsters off the top of their heads. Public judgment, by contrast, is what develops over time when people pay attention to something and discuss it with their friends and neighbors. It takes a long time to develop and involves a complex social interaction that is largely unplanned and unprogrammable.
Source: Lessons Learned the Hard Way, by Newt Gingrich, p. 27 , Jul 2, 1998

EITC is an invitation to fraud

Consider the Earned Income Credit program, one of the biggest scandals in the IRS. This program provides cash to people below a certain income level. The Clinton Administration’s own estimates of waste, fraud, and error indicate that the program has a 21% rate of error. That means that $1 out of every $5 distributed is wrong. There are big problems in a 21% error rate in a government program that gives away money. First it teaches people to commit fraud. A society in which the dishonest gain more benefit than the honest is one whose very fabric is being frayed. Second, it points up a grotesque double standard in the inner workings of the IRS: when you send them your money, they punish you for anything less than 100% accuracy, but when they send your money to someone else, they accept their own massive error rate. The IRS sends out an estimated $5 billion annually in wrong payments under the Earned Income Tax program. That is enough money to abolish the entire death tax.
Source: Lessons Learned the Hard Way, by Newt Gingrich, p.199 , Jul 2, 1998

Adopt a single-rate tax system.

Gingrich signed the Contract From America

The Contract from America, clause 4. Enact Fundamental Tax Reform:

Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words--the length of the original Constitution.

Source: The Contract From America 10-CFA04 on Jul 8, 2010

Repeal tax hikes in capital gains and death taxes.

Gingrich signed the Contract From America

The Contract from America, clause 10. Stop the Tax Hikes:

Permanently repeal all tax hikes, including those to the income, capital gains, and death taxes, currently scheduled to begin in 2011.

Source: The Contract From America 10-CFA10 on Jul 8, 2010

Repeal marriage tax; cut middle class taxes.

Gingrich wrote the Contract with America:

[As part of the Contract with America, within 100 days we pledge to bring to the House Floor the following bill]:

The American Dream Restoration Act:
A $500-per-child tax credit, begin repeal of the marriage tax penalty, and creation of American Dream Savings Accounts to provide middle-class tax relief.
Source: Contract with America 93-CWA7 on Sep 27, 1994

Other candidates on Tax Reform: Newt Gingrich on other issues:
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Page last updated: May 31, 2012