By: Governor Mitt Romney
New Hampshire Union-Leader
New Hampshire's motto of "Live Free or Die" reflects a central truth of America's political philosophy: the more government takes from its citizens, the less free we are. From the Boston Tea Party to the Reagan Revolution, opposition to excessive taxation by the government has been a founding principle of our political life. The unifying principle of the Republican party is that we should tax our citizens less, and as a result have a smaller government. I embrace that principle and have made tax relief one of the cornerstones of my presidential campaign.
Central to my pro-growth economic agenda is a belief that middle class Americans should not be taxed as they save and invest for the future. We need a Middle Class Savings plan to provide critical tax relief to American families. We must cut taxes and make more Americans part of the investor class. I have proposed changing the rate of taxation on capital gains, dividends and interest to 0 percent for middle class Americans.
Helping more Americans save and invest is crucial to meeting the challenges of an aging baby boom generation and ensuring the financial security of America. Early in our nation's history, only the very wealthy could invest in the stock market. Now, over half of the adults in America own stocks, either individually or through pension plans and mutual funds. The democratization of capital has increased the wealth of our country, and allowed the American system of free market capitalism to grow.
In 2003, we passed major cuts in the tax rate on capital gains and dividends, instituting a new, lower top rate of 15 percent. Many Democratic critics of this tax cut claimed that cutting rates would blow a hole in our budget and hurt our prosperity. In fact, the opposite occurred. These tax cuts galvanized our economy. Corporations increased dividend payments, putting more money in the pockets of American investors. Americans were able to keep more of their capital gains and reinvest in the economy. The rate of economic growth in our economy more than tripled, going from 0.8 percent in the two years before the rate cuts to 3.1 percent in the two years following the tax cuts. Capital gains tax receipts actually increased from $58 billion in 2002 to $103 billion in 2006.
Tax cuts lead to economic growth, which lead to higher incomes for Americans and more wealth creation without lowering government revenues.
I have been talking about my plan to eliminate taxes on dividends, capital gains, and interest on middle class families since the beginning of my campaign. Today, in New Hampshire, I will be announcing the specific details of my plan.
Under my plan, any taxpayer with Adjusted Gross Income of under $200,000 would pay a tax rate of absolutely 0 percent on all of the income they earn from their savings. This will allow over 95 percent of American families to save and invest tax-free without worrying about the federal government reaching into their pockets and snatching a share of their savings income each year.
Whether a young couple saves their money in a bank account for a down-payment on a new home, or a family invests in mutual funds to save for their daughter's college fund, these taxpayers will be able to benefit from the tax-free appreciation of their savings, which will greatly increase their ability to build wealth and achieve the American dream.
Recent difficulties in the housing market offer another important reason for helping more Americans save and invest. Much of the recent activity and appreciation in the housing market was driven by the widespread use of new mortgage instruments that allowed homebuyers to purchase houses without putting up any down payment and using low upfront payments that would later increase.
As we face a new reality in the housing market with much tougher lending standards, these no-money down mortgages will no longer be available. The traditional practice of saving for a down payment for a home will be the new standard practice. We must keep the American dream of home ownership reachable by middle class Americans. My middle class savings proposal will allow American families to more quickly save the sums necessary for down payments on homes.
I believe Americans are taxed too much. By making savings for middle class Americans tax-free, we can help alleviate the financial pressure on American families and allow them to keep more of their own money. When citizens keep more of their money and make their own decisions on how to invest, economic growth increases, the economy becomes more efficient, more jobs are created, and prosperity's reach expands. As President, I will fight for lower taxes for all Americans.
Mitt Romney, a former Governor of Massachusetts, is running for the Republican presidential nomination.
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Friday, September 7, 2007
By: Governor Mitt Romney