The American Option

  • Introduced by Senator Jim DeMint (R-SC), the American Option Act proposes to aggressively and immediately lower taxes on businesses and individuals.
  • Tax cuts will create rapid growth in wages and business incomes, which in turn will significantly help struggling sectors of the economy, i.e. Smart Stimulus.
  • Consumer and government interest rates would be 5-10% lower making it easier for businesses to borrow and families to buy a home or refinance a mortgage.
  • Smart Stimulus creates business investment of $254 billion in new buildings, equipment and infrastructure.

Smart Stimulus is possible by:

  • Reducing business taxes from 35 percent to 25 percent
  • Making tax policy changes of 2001 and 2003 permanent
  • Dramatically reducing the estate tax rate to 15 percent
  • Reducing the individual tax rates to three levels – 10, 15 and 25 percent
  • Keeping tax rates on dividends and capital gains at 15 percent
  • Permanently repeals the Alternative Minimum Tax

Why Tax Cuts are the Best Solution

  • Personal Wealth: When Americans have more money in their pockets, they can make better decisions for their family including on health care, education and personal investment.
  • Do No Harm: It is impossible for the economy to recover when Americans face the threat of a punitive tax hike, as they do now.
  • Better Wages: Businesses can provide better wages & benefits to their workers.
  • Incentives: The most effective means of helping the economy recover is to improve the incentives that drive economic activity, and that means reducing tax rates on work, saving, investment, risk taking and entrepreneurial activity.

Results for America

  • Employment: Increases employment by a half million jobs in 2009 and by 1.3 million jobs in 2010, and creates 4.8 million jobs between 2009 and 2012.
  • Families: Disposable personal income for an average family of four would rise, on average, by $1,300 in 2009 and quickly rise to more than $4,500 by 2013.
  • No New Taxes: Without the pro-growth elements of this plan, these families could expect their tax rates to rise 4 percentage points, from an effective rate of 12% to an effective rate of 16%. This plan would keep the rate just under 13%.
  • Domestic Auto Sales: Between 2009 and 2011, total sales of new automobiles and light trucks would increase by $24.5 billion.
  • Small Businesses: The effective tax rates for small businesses would fall from an average of 17.1% to an average of 14.8% and provide more than 2 million successful small businesses with lower tax rates.

Twice the Jobs at Half the Price

Check out Heritage ideas for how to provide twice the jobs at half the price at