1992 Ad

Nation's Business, Jan, 1992 by Roger Thompson

* Give families a $300 tax credit for children ages 6 to 18 and a $1,000 credit for children under 6. A family whose taxes are less than the credits they could receive would not be paid the difference, however.

* Reduce the top capital-gains tax rate to 15 percent for individuals and corporations, and cut the rate to 7.5 percent for lower-bracket individuals. Also index capital gains for inflation, thus protecting gains produced by inflation from taxation.

* Restore depreciation for investments in plant and equipment to the faster write-offs permitted before 1986 Tax Reform.

* Establish a new type of Individual Retirement Account that would permit penalty-free early withdrawals for first-time home buyers and a child's college expenses.

* Repeal the passive-loss limitations that bar investors in rental real estate from taking the same kind of tax deductions for losses as investors in other types of ventures not related to real estate.

* Establish research incentives, including making the research and experimentation tax credit permanent.

* Cut the Social Security payroll tax by 2 percentage points, one each for employer and employee, from its current combined rate of 15.3 percent on the first $55,000 of wages.

In addition to these tax cuts, the Chamber also favors a moratorium on all new federal regulations until the economy has achieved a 4 percent annual growth rate and a new process has been created to evaluate the costs and benefits of regulations.

"We don't argue that there is anything Congress can do to jump-start the economy this year [1992]," says MacReynolds, the Chamber's chief economic forecaster. "The fact that there will be $50 billion in new taxes [at all levels] this year and new regulatory compliance costs of $70 billion means there is no way to jump-start the economy. But over the long term, we can improve economic growth to 4 percent on an annual basis, returning it to the trend set in the 1960s and again between 1983 and 1988. It is possible to re-create those conditions. Both of those expansions started with tax cuts."

Without swift action on broad-based tax cuts, it is doubtful that most Americans will be better off four years from now than they are today. Many are looking to President Bush for leadership.

Says Ewald Males, owner of E&M Electric, an electrical contractor in rural Fennville, Mich.: "I voted for George Bush. I thought he was a good man. But right now, he is paying a lot of attention to what goes on outside of the U.S. and letting everything go right here at home. He has really let a lot of Americans down, and I'm one of them."