If an extra $1 trillion in surplus revenues will be flowing into federal coffers over the next 15 years, as White House economic forecasters predict, then doesn't that cinch the case for big tax cuts?
After all, surpluses that huge suggest taxpayers are being overcharged; it's time they were given a rebate. Even allowing that some of the surpluses are fluff (the administration, for instance, counts Social Security funds twice), there still seems to be room to provide significant tax relief.
In fact, the Conservative Action Team (CATS), headed by House Ways and Means Chairman Bill Archer, R-Texas, are already on it. They've introduced a 10-year "CATS-cut" measure calling for $778 billion in cuts.
The comprehensive tax-slashing plan includes elements that are hugely popular with the taxpaying public, such as repeal of the marriage penalty and elimination of both the estate (death) tax and the alternative minimum tax. It also whacks the capital gains tax down from 20 percent to 10 percent and raises -- as well as indexes to inflation -- both the Roth and IRA contribution levels to $5,000.
Is all this really possible, or are the CATS-cutters just dreaming? According to a Heritage Foundation study, it is not only possible, it's practical. Much of the CATS' plan was taken from the study, headed by economist William Beach.
But in addition to the other cuts, Beach includes a health-care tax credit for workers who do not have employer-sponsored health insurance. It would cost the government about $400 million, but given the benefits that would go to millions of previously uninsured Americans, it would be well worth it.
"At a minimum, all Americans should be provided with approximately equal tax treatment for their health insurance expenses," Beach says. "The simplest way is to provide a 30 percent refundable tax credit for premiums paid directly by individuals and families for their health insurance."
Over 10 years, the Beach-CATS capital-gains cut would provide $47.8 billion in tax relief, but the expanded Roth/IRAs would generate $3.6 billion in more revenues, and the 30 percent tax credit would save families $33.5 billion on their health-care bills.
"The federal budget may be in balance, but family budgets are badly out of balance," Beach concludes. "Americans are still sending far too much of their income to Washington."
Are there any taxpayers around who disagree?
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