A Tidal Wave Of Budget Surpluses?
May 6, 1998
A team of budget experts assembled by Jack Kemp at Empower America is forecasting a total of $1.34 trillion in budget surpluses for the five years through 2003. This is based on a 4 percent nominal growth rate in gross domestic product over the period and a 6.3 percent annual growth in tax revenue.
Some analysts charge that politicians of both parties are trying to minimize future projections in their public statements for fear of having to face a groundswell of public demand for significant tax cuts. But cuts are exactly what Kemp's group is championing.
- They want 2 percentage points knocked off the Social Security payroll tax -- thereby using up $400 billion of the $1.34 trillion surplus.
- Another $200 billion would be applied to restoring tax rates to the level they were in the last year of the Reagan administration.
- Eliminating the Alternative Minimum Tax would involve $30 billion.
- The remaining $600 billion or so would be used to span the distance between 15 percent and 28 percent tax brackets.
The capital gains holding period would be cut to 12 months from 18 and the 20 percent rate would be replaced by a 50 percent exclusion. Kemp would also eliminate the income caps on the new Roth IRA accounts and allow a higher maximum annual contribution, $5,000 rather than $2,000.
Source: Jude Wanniski (Polyconomics), "The Politics of Surplus," Washington Times, May 6, 1998.
Browse more articles on Tax and Spending Issues