This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Morici: To Boost Growth, Everyone Should Pay Income Tax

NEW YORK ( TheStreet) -- The economy is not doing well. Unemployment is too high and big deficits threaten the credit worthiness of the federal government. Only genuine tax reform will make things right.

With 46% of Americans paying no income taxes and many more who pay very little, it is no wonder federal spending is at record levels. It's simply too easy to vote for politicians who promise free health-care services and other worthy benefits by raising taxes on someone else -- the wealthy.

Taxing the well off is not free. It slows growth, smothers jobs creation and pushes down wages for the middle class and working poor.

Much of the U.S. economy is not large multinationals but are innovative startups, the local restaurant and other small business services that are mostly organized as limited liability corporations and pay the highest personal tax rates. For those jobs creators the combination of federal, state and local taxes often increases the bite on income to well above 50%.

The impact is large and negative. During the Obama years, unemployment peaked at 10% and the economy has since grown at a 2.1% pace.

Over the comparable Reagan years, when taxes, especially on the well-off were lower but more voters paid at least some income taxes, unemployment peaked at 10.8% -- but the economy grew at 5.3%.

Simply, with lower taxes on the wealthy and more voters with skin in the game, the federal government did less and the economy did better -- many more jobs were created and workers had more power to bargain for decent wages than they do now.

The highest marginal federal tax bracket is about 40%, but with so few Americans paying significant taxes the average income tax rate is about 12%.

To exercise some restraint on federal spending, why not require everyone to pay at least 6% of their income in taxes and set the maximum rate of 18%? That's about what Barack and Michelle Obama paid on their 2012 income. Folks in the middle would pay something in between so that the average take is still 12% of income.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs