Tackling Our Economic Challenges
Economic challenges are impacting all American families. From 401(k) plans to home loans, from small businesses to college funds, we are all feeling the pinch. I have had the benefit of hearing your recommendations, concerns and frustrations. Congress has been focused in recent weeks on short-term plans to deal with the immediate crisis in our credit markets. But we will never fully restore our economic strength and vitality without a long-term plan. First, we need to ensure that our current crisis never repeats itself. While modernizing existing regulation will be a lengthy and difficult process, we must take immediate steps to investigate wrongdoing and punish those whose abuses and criminal behaviors have exacerbated our current financial crisis. Ensuring that those who have broken the law will suffer the consequences is not just a matter of fairness, it will prevent further abuses down the road. Second, we need to promote growth, competitiveness and job creation.
We have been particularly outraged about recent reports of corporate greed, like the $440,000 AIG "retreat" that may have been held at taxpayer expense. That is why I demanded that the Chairman of the Federal Reserve immediately investigate and, if federal dollars were used, seek a full refund for the taxpayers. I have also directly requested that the FBI expand its focus on financial crimes. Corporate malfeasance cannot and will not be tolerated. Criminals must be prosecuted.
In order to get our economy back on track and stimulate economic and job growth, I will continue to fight for my plan to dramatically simplify the tax code and reduce the tax burden on working families and small businesses. The Fair and Simple Tax (FAST) Act is the right medicine for what is ailing our economy right now.
The FAST Act would cut the current six-bracket tax structure in half and employ three simple rates – 10, 15, and 30 percent. Major deductions including mortgage interest, charity, state and local taxes, the child tax credit and the personal exemption would be preserved. It would also provide an optional one-page form for filing taxes.
The FAST Act would eliminate the double taxation of the gift and estate taxes, and index the Alternative Minimum Tax for inflation so that they don’t continue to punish middle-income families.
The United States currently has one of the highest corporate tax rates in the developed world. This high tax rate does not create more jobs. In fact, it may help drive some of them overseas. That’s why the FAST Act would reduce the corporate tax rate from 35 to 25 percent. It would also reduce the individual capital gains tax rate from 15 to 10 percent and index the taxable income for inflation. Both of these changes will generate more investment and more growth.
Saving for retirement or education is becoming harder and harder for working families. The FAST Act creates three new tax-free savings accounts to incentivize savings – the Retirement Savings Account and the Lifetime Savings Account, both providing a $5,000 tax-free contribution, and the Lifetime Skills Account, which provides a $1,000 tax-free contribution.
Paying for health care is also a challenge for millions of Americans. The FAST Act aims to provide families with more control over their health care spending, providing a $7,500 tax deduction for individuals and a $15,000 tax deduction for families who do not receive employer-sponsored health coverage.
When we’re facing a downturn like this, we have to take the right steps to prevent a bad situation from getting worse. I believe the FAST Act has all the elements necessary to help working families get through this crisis and come out stronger and better prepared to face the future.
