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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,922.39 -60.20 -0.35%
S&P 500 1,973.71 -5.20 -0.26%
NASDAQ 4,450.9860 +6.0770 0.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs