The key to a robust recovery in job creation is to simplify the tax code and maximize capital investment, which begins with eliminating the capital gains tax and the death tax, reducing the corporate tax to 12.5 percent, and 100 percent expensing of all new capital equipment purchases.Alex Pappas on DailyCaller.com writes of Newt's long-standing supporter of the flat tax:
These tax changes will liberate private capital to move quickly to the most productive investments, thereby accelerating economic growth. This is the opposite of the failed model practiced by the Obama administration, which is bureaucracies steering taxpayer stimulus dollars to allegedly “shovel ready” jobs and politically connected firms such as Solyndra.
At the same time as we liberate capital to create new jobs, we must liberate taxpayers from the IRS tax code, which is why my jobs proposals also call for an optional flat tax of 15 or less%. All workers and businesses would have the freedom to choose each year to file their income taxes either under the new flat tax option with limited deductions or under the current U.S. income tax code. Anyone who strongly favors a deduction or credit under the federal government’s current complex income tax system would have the choice to keep filing that way.
This optional flat tax system will create a new personal deduction for every adult of $10,000 to $12,000 (double for married couple), which would be above the established poverty level at $40,000 to $48,000. The current $1,000 tax credit for each child age sixteen or younger would also apply, as would the current earned income tax credit (EITC).
An optional flat tax reform will be simple: tax returns can be done on one sheet of paper. Subtract from income a standard deduction and deductions for charity and home ownership, multiply the result by the fixed single rate of taxation of at most 15%, and the process is over.
The optional flat tax could save taxpayers an estimated $400 billion each year in costs of record keeping, paying for tax advice, and filling out complicated tax returns. This savings doesn’t even account for countless hours of aggravation and worry and the sheer complexity of tax compliance. These tax compliance savings are the functional equivalent of a permanent, pro-growth tax cut and will provide a substantial boost to annual growth rate.
This concept of an optional flat tax would give American taxpayers an opportunity to choose simplicity versus complexity and a single rate over a lot of deductions.
Because the flat tax is optional, it does not raise taxes on a single person or unfairly impact seniors, lower income workers, or the poor.
Once we combine these pro growth tax reforms with my other reform proposals for welfare reform, social security, and spending, we will experience a stunning and swift turnaround in the economy.
According to Gingrich’s campaign, in 1997, as Speaker of the House, he said, “There are things I would like to do like a flat tax with virtual elimination of the IRS.”
In 2005, he wrote in Steve Forbes’ book about the flat tax that, “I believe there is a real opportunity for a similar grass roots revolution imposing the flat tax on Washington. As people learn how much money and time they can save through a flat tax, they are going to demand a simple alternative to the complexity and uncertainty of the Internal Revenue Service.”
In a 2008 National Review op-ed, Gingrich wrote that, “An optional flat tax would save taxpayers more than $100 billion per year and reduce compliance costs by over 90 percent. This is a stimulus package that would have an immediate effect on our American economy.”