Wednesday, April 4, 2007

Gingrich's Economics

As the 2001 and 2003 tax rate cuts are set to expire, and we see no move in the Democratic Leadership to drop their opposition to renewing the cuts, we're faced with some of the largest tax hikes in over a decade. Newt Gingrich summarizes the GOP's $800 million tax hike estimate thusly:

... You're a family of four earning $60,000 a year: Your income-tax bill will rise 61% in 2011, from $3,030 to $4,893.

... You're an elderly couple earning $40,000 a year: Your taxes will go up by 156% in 2011, from $583 to $1,489.

... You're a woman: You could be one of the 83 million American women who could see their taxes rise by an average of $2,068.

... You're married: You could be one of the 48 million married couples who will pay an average of $2,899 more under the liberal tax increase.

... You have kids: 42 million families with children will pay an average of $2,181 more in taxes.

... You're a small-business owner: 26 million small-business owners will get a tax bill for an average of $3,960 more than before.

  • The 10% Tax Bracket Will Become 15%: More than five million families and individuals who previously owed no taxes will become subject to taxation.Marriage
  • Marriage Penalty Relief Will Be Eliminated $466 in additional taxes in 2011.
  • The Child Tax Credit Will Be Cut in Half: 31 million Americans will pay an average of $859 more in taxes in 2011.

Those numbers are likely inflated to some degree, but the impact of not making the 2001 and 2003 rate cuts permanent are profound. The GOP's $800m figure should be reassessed in light of the lack of probability that Democrats will allow the AMT's impact to expand. An effectual AMT hike would have severe political backlash, in addition to the predicted tax hike, that Reid and Pelosi likely won't endure. Removing that the figure falls to $300-400m (figure used by Robert D. Novak). Still frightening and substantial.

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