Americans for Tax Reform has created a handy chart comparing the features of both:
Is Rep. Paul Ryan’s “Path to Prosperity” potentially the most important and necessary piece of economic legislation since President Ronald Reagan’s tax cuts in 1981? Quite likely. The blueprint embraces free markets and individual choice to radically reshape America’s social welfare state for the 21st century and shrink government. Instead of looking for ways to finance an ever-expanding public sector, it would prevent Washington from growing to a projected 45 percent of GDP by 2050 (vs. 24 percent today) and instead reduce it to just under 15 percent by that year. Ryan would downsize government to its smallest size since 1950 and prevent the Europeanization of the American economy. The Ryan Path embraces dynamic growth, not managed decline and stagnation.
If only it were an April Fools’ Day prank. With Japan officially cutting its corporate tax rate as of today, America now has the highest rate among advanced economies. Even its effective tax rate is way above average despite the likes of General Electric spending billions to game the labyrinthine code. A smarter approach would be to substitute a business consumption tax.
The White House perhaps rightly worries, via a Treasury blog posting, that a tax amnesty for U.S. companies repatriating profit might distract from broader reform. (House GOP Majority Leader Eric Cantor recently came out for the idea.) But its economic objection to the idea is confused.
OK, so the U.S. government’s auditor has found duplication and overlap that may be wasting $100 billion or more a year, according to the Republican senator who commissioned the study. How can anyone argue for higher taxes as long as Washington is so inefficient? A few points:
David Leonhardt (NYT) makes the point that U.S. companies often pay far less than the top statutory corporate tax rate of 35 percent:
I am a little late on this, but AmSpec’s John Guardiano is dead on:
Kennedy didn’t think America was “as strong as [it] should be.” And the reason, he surmised, was that the heavy hand of big government was too onerous. The feds, he realized, were stifling initiative and entrepreneurship. He knew the solution was to cut marginal tax rates. And so he did just that.
The folks at Americans for Tax reform have assembled a pretty solid list of ideas. Since Obama is apparently going for growth in an attempt to get reelected, he might want to take a gander at a few of these:
What should America do about its troubled economy? Sometimes the real world provides the best laboratory for political and economic experiments. Democratic capitalism vs. totalitarian communism? One quick look at East Germany and West Germany in the 1980s or North Korea and South Korea today provides easy analysis of which is the preferable way to create and organize a peaceful and prosperous society.