Monday, January 28, 2008

Westmoreland: Stimulus Requires Pro-Growth Policies

U.S. Rep. Lynn Westmoreland expressed his support last week for the Republican Study Committee’s pro-growth economic package as the best means to stimulate our nation’s sagging economy.

“Our economy has suffered some serious shocks, from the housing market problems to drops in the stock markets, at the same time that the dollar isn’t going as far for American families at the gas pump or the grocery store,” Westmoreland said. “Now is a great time for this series of targeted tax cuts that will spur consumer spending and encourage businesses to continue to invest, expand and create new jobs.”

Highlights: The Economic Growth Act contains four main provisions, as follows:

1) Full, Immediate Expensing. The bill would allow all businesses to immediately expense — or fully deduct on their tax returns — the costs of assets (including buildings) they purchase for their business in the year that they buy such assets (“Section 179” expensing). Under current law, businesses can only take limited deductions in pieces, over several years. By uncapping and accelerating the expensing, this provision would encourage the purchase of assets with which to grow a business.

2) Significant Reduction in the Top Corporate Tax Rate. The bill would immediately cut the top corporate income tax rate from 35 percent to 25 percent, aligning it with the average rate in the European Union. By allowing businesses to keep more of the money they earn, this provision would encourage the expansion of businesses, the hiring of more workers and an acceleration of investment, while making American companies more competitive internationally.

3) End the Capital Gains Tax on Inflation. The bill would index for inflation the cost basis used when calculating the capital gains tax on assets acquired before the end of 2008. Under current law, the capital gains tax is based on the difference in the original purchase price of the asset and the sale price of the asset. However, some of this difference, or “gain,” can be attributed to inflation. By effectively reducing the amount of a gain that is taxable, this provision would encourage the movement of capital in 2008 and spur voluminous economic investment.

4) Simplify the Capital Gains Rate Structure. The bill would allow corporations to benefit from the 15 percent capital gains rate. Under current law, individuals pay a top capital gains rate of 15 percent, but corporations are subject to a 35 percent top rate. By encouraging corporations to sell unwanted assets, this provision would unleash funds and materials with which to create jobs and grow the economy.

“We all like to think that Washington can flip a switch and help our nation avoid an economic downtown,” Westmoreland said. “Fact is, we have a strong, dynamic economy that doesn’t turn on a dime. I’m sure that in coming weeks, Congress is going to take act to kick start the economy as much as possible but our best hope is too strengthen the fundamentals of our economy even more to assure steady, long-term growth. That’s what the Republican Study Committee’s Economic Growth Act provides and I hope that we’ll be able to incorporate these ideas into any stimulus package.”

The Republican Study Committee is the caucus for House conservatives. The RSC’s pro-growth plan mirrors proposals put forth by Americans for Tax Reform.

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