Last week, Newt Gingrich released his 21st Century Contract with America, composed of 10 specific legislative proposals he would enact if elected President. In the 1994 Congressional campaigns, Republicans not only rode Newt's Contract with America proposals to Republican majorities in Congress. They maintained their House majority for 12 years, after Republicans had only held a House majority for 2 of the previous 74 years.
Newt's 21st century contract is similarly a document on which the entire Republican Party can campaign next year, and win a generation of governing majorities.
Booming Recovery, Long Overdue
Gingrich pledges in his new contract to "Return to robust job creation with a bold set of tax cuts and regulatory reforms that will free American entrepreneurs to invest and hire, as well as by reforming the Federal Reserve."
That includes a proposal for corporate tax reform, closing loopholes and reducing the federal rate from 35%, second highest in the developed world, all the way down to 12.5%. Ireland, long a poor, economically backward nation, adopted that rate in 1988 when it suffered the second lowest per capita income in the EU. The Irish rode the resulting boom over the next 20 years to the second highest per capita income in the EU. Jack Kemp used to advance this policy for America as well, noting that our own Treasury Department issued a study showing that Ireland raises more corporate tax revenues as a percent of GDP with this low rate than we do with our rate nearly 3 times as high.
Gingrich's economic recovery plan would also abolish the capital gains tax, because "At a zero percent rate, hundreds of billions of dollars in new investments would pour into the United States to create new firms and build new factories." By effectively double-taxing capital income, the capital gains levy discourages the venture capital that feeds start-ups and creates jobs. That is why 14 out of 30 OECD countries, plus China, Taiwan, Hong Kong, Singapore, and others, already enjoy zero capital gains taxes. Gingrich's Contract would further eliminate double taxation by abolishing the death tax and the Alternative Minimum Tax.
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