The Republican tax proposal unveiled this week will create a boom in the American economy. By lowering corporate tax rates and creating a simpler tax code with fewer brackets, the GOP plan will help encourage capital investment and accelerate economic growth. For these reasons alone, the proposal is worthy of support, but I do believe there is room for improvement. While we are cutting corporate and business top marginal rates, we should similarly lower top marginal individual tax rates.
During the Obama Administration, the Bush Tax Cuts were allowed to expire, which pushed the top marginal individual rate up to 39.6%. The rate remains 39.6% today, and the Republican plan does not lower it. Granted, the GOP recommendation is to increase the earnings threshold for filers to qualify for the top marginal rate from $480,000 to $1,000,000, but the second highest rate of 35% still will wallop families earning $260,000 and above, while families earning from $90,000-$250,000 will still pay a federal income tax rate of 25%. While the so-called standard deduction will be doubled from $6,000 to $12,000 for individual filers, and from $12,000 to $24,000 for family filers, the top individual rates are still too high.
While the GOP is cutting the top marginal corporate tax rates by 15%, I believe they should match the 20% top marginal rate to-be-paid by corporations for small businesses like LLCs, S-Corps, and Partnerships, while also cutting individual tax rates. We should pursue a flat income tax bracket between 15%-20% that will lower rates for all families when combined with a $2,000 child tax credit and standard deductions. By lowering individual rates across the board, as well as corporate tax rates, we can usher in an era of unprecedented economic growth in the American economy for all American families.
While the result of lower rates across-the-board will be increased revenue to Washington, Congress must still begin to curtail the size and scope of the federal government. Republicans should not make the same mistakes we made with the Bush Tax Cuts; we cannot simply cut taxes to try and grow our way out of trillion dollar deficits and a staggering national debt. There must be fiscal restraint, coupled with entitlement reform, to slow the growth of government and restore it to constitutional boundaries.
I would vote for the GOP bill as proposed, as it presents the single most sweeping tax reform package since the 1980s, but I would prefer we go further and cut individual tax rates while we cut corporate rates across-the-board. Lower taxes and less government is the recipe for an American economic renaissance, and are the keys to a new American century.