Some suggestions to avoid the fiscal cliff
Editor, the Advocate:
As the fiscal cliff approaches, the quality of the rhetoric diminishes. Republicans dig in on tax rate increases, and Obama is intent on penalizing those he regards as wealthy. The focus should be on economic recovery. Politicians like to talk about them creating jobs; the objective should be to step back and let the economy increase jobs.
Here are a few suggestions:
On tax rates, the issue has never been that the rich can not afford to pay higher taxes. The aim should be to increase revenue and cut spending. Suppose:
1. The top tax rate were 34 percent for a year when the gross domestic product (GDP) does not increase
2. The top tax rate were 35 percent for a year when the GDP increases 0-2 percent
3. The top tax rate were 36 percent for a year when the GDP increases 2-4 percent
4. The top tax rate were 37 percent for a year when the GDP increases more than 4 percent
Capital gains taxes for assets held less than one year at the personal income tax rate, for assets held one to five years at 20 percent, and for assets held more than five years at zero.
Dividends taxed at the personal income tax rate minus the top corporate tax rate.
Corporate tax rate reduced to 25 percent dollar for dollar as tax incentives (loopholes) are eliminated and revenues are increased.
Make utility co-ops, TVA, and credit unions subject to federal corporate taxes.
Jim Stokes, Victoria