Romney Proposes Tax Reform Plan
Republican presidential candidate Mitt Romney introduced a 160-page plan for generating jobs and economic growth, including reductions in the corporate tax rate, along with the elimination of taxes on capital gains, interest and dividends.
Romney issued his plan two days before President Obama is scheduled to deliver a speech before a joint session of Congress outlining his own jobs program. During a speech in North Las Vegas Tuesday, the former Massachusetts governor compared his plan to Obama's strategy for job creation by taking an iPhone out of his pocket.
"President Obama's strategy is a pay phone strategy and we're in a smart phone world," he said. "What he's doing is taking quarters and stuffing them into the pay phone [and he] can't figure out why it's not working. It's not connected anymore, Mr. President."
Romney's plan, detailed in a document entitled “Believe in America,” with an introduction by Romney, describes the five bills that he plans to send to Congress on the first day of his term if he were elected, along with five executive orders he would issue on day one. Among them are a bill Romney’s campaign called the American Competitiveness Act, which would reduce the corporate tax rate to 25 percent.
Romney’s plan calls for maintaining marginal tax rates for individuals at their current levels while eliminating the “death tax,” also known as the estate tax, and reducing taxes on savings and investment. The long-term goal would be to pursue a flatter, simpler tax structure. Romney’s plan proposes to lower the corporate tax rate from the current top rate of 35 percent to 25 percent and transition to a “territorial” tax system.
“President Obama has raised or threatened to raise taxes on both individuals and businesses,” Romney wrote in an editorial for USA Today on Monday. “I would press hard in the opposite direction. Marginal income tax rates and tax rates on savings and investment must be kept low. Further, taxes on interest, dividends and capital gains for middle-income taxpayers should be eliminated. Our corporate tax rate is among the world’s highest. It leaves U.S. firms at a competitive disadvantage and induces them to park their profits abroad, benefiting the rest of the world at our expense. I will fix these problems with permanent solutions. Ultimately, I will press for a total overhaul of our overly complex and inefficient system of taxation.”
Under the plan, Romney would seek to eliminate taxes on capital gains, dividends and interest for any taxpayer with an adjusted gross income of under $200,000, saying that would help Americans to prepare for retirement and enjoy the freedom that accompanies financial security.
He also called for the permanent elimination of the estate tax and for maintaining the current individual tax rates, which are set to expire at the end of 2012.
Romney also plans to press for an immediate reduction of the corporate tax rate from 35 to 25 percent, and his plan repeated his controversial statement, “Corporations are people.”
“Worries that a lower corporate tax rate are unfair or unaffordable are fundamentally misplaced,” said the plan. “The truth is, as Mitt Romney likes to say, ‘corporations are people.’ They represent human beings acting cooperatively to be economically productive. Each dollar earned by a corporation is a dollar that ultimately flows, in one form or another, to employees or to shareholders. And those shareholders include the millions of Americans who own shares in mutual funds or who have pensions that invest in the American economy.”
Romney also called for a “territorial” tax system that only taxes profits earned in the U.S., but not globally.
“Romney supports the recommendation of the Bowles-Simpson Commission to make the switch to a territorial system,” said his plan. “This would enhance the ability of our corporations to compete around the world and would end the perverse incentives that keep companies from repatriating profits to the United States. Domestic companies that can compete vigorously abroad are in a better position to grow and create jobs at home. Complex technical issues will arise during the transition: amendments to the tax code need to be crafted in a way that does not encourage corporations to game the system and export jobs or to move their U.S. headquarters abroad. With proper draftsmanship, these potential hazards can be overcome.”
Other elements of Romney's 59-point plan include cutting non-defense spending by 5 percent, repealing the health care reform law, restricting any new federal regulations, opening up additional areas for drilling permits for energy exploration, and imposing sanctions on China for its currency policies by listing China as a currency manipulator in the Treasury Department's biannual reports.