By Newt Gingrich
Encouraging work, economic growth, entrepreneurial innovation and the revitalization of our manufacturing base are the answers to the unemployment and poverty crises confronting America.
This is why I have proposed a tax policy that maximizes private capital investment to create jobs. It starts with eliminating the capital gains tax and the death tax, reducing the corporate tax to 12.5%, and 100% expensing of all new capital equipment purchases.
Eliminating the capital gains tax would liberate private capital to move quickly to the most productive investments, thereby accelerating economic growth. This is the opposite of the failed model practiced by the Obama administration, which is bureaucracies steering taxpayer stimulus dollars to allegedly "shovel ready" jobs and politically connected firms such as Solyndra.
Many don't realize that the capital gains tax is not the only tax on capital income. First, the business in which one is investing must pay a 35% corporate tax on all income. Second, any dividends distributed to shareholders are taxed as individual income. Third, when the investor sells his share, he has to pay any capital gains taxes. Finally, if there is anything the individual has left at death, then this capital income is taxed again -- a whopping fourth time -- by the death tax.
All these taxes discourage investment in the United States and encourage it in foreign markets. This directly affects every American through lost jobs, lower wages and a weaker economy as the capital investment that creates jobs and bids up wages goes to another country, leaving American workers behind.
When we cut the capital gains tax in 1997 during my tenure as speaker of the House, venture capital funding increased from $10 billion in 1996 to $53 billion in 1999; the stock market, as measured by the Dow Jones industrial average, rose 40% from under 7,000 in 1997 to over 10,000 in 2000; and nearly 10 million jobs were created from 1997 to 2000.
And we balanced the federal budget for four straight years for the first time since the 1930s and paid off over $400 billion in debt.
Let's do it again, and more.