Quayle's Plan For Major Tax Cuts
January 25, 1999
Former Vice President Dan Quayle is proposing to cut taxes for every American by an average of 30 percent. He also wants to abolish the marriage penalty and death taxes, cut corporate and individual capital gains taxes by 30 percent, and reduce the top corporate income tax rate to 28 percent.
Here is a brief description of his plan:
- He would simplify and reduce marginal tax rates for individuals by establishing just three rates.
- A 10 percent rate on joint returns by couples with incomes below $44,000, 20 percent on incomes of those making $44,000 to $160,000, and 28 percent on incomes above $160,000.
- Eliminate most tax preferences, credits and deductions -- while preserving core incentives such as interest on home mortgages, charitable contributions and health care, retirement and education expenses.
- He would permit individual savings accounts which would allow each person to contribute up to $10,000 annually in after-tax dollars with tax-free buildup for use in retirement, education of a child, health-care expenses, purchase of a first home and long-term care for elderly or disabled relatives.
In addition, workers would have the choice of placing up to 30 percent of their Social Security payroll tax into their accounts. Such contributions would not count against the $10,000 annual account limit, and those who opted for this plan would have their Social Security benefits adjusted proportionately.
Quayle estimates that a 30-year-old earning $32,000 a year who places the maximum amount in what he calls a "Freedom Account" would -- assuming a nominal 7.5 percent rate of interest -- accumulate $125,000 after 35 years.
The former vice president estimates the total cost of the plan at about $1.4 trillion over five years.
Source: Dan Quayle, "Time for a 30 Percent Tax Cut," Wall Street Journal, January 25, 1999.
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