Pawlenty Proposes Three-Tier Income Tax System

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Republican presidential candidate Tim Pawlenty will offer a plan for an overhaul of the tax system Tuesday that would simplify individual tax rates to just three options.

Pawlenty's three-tier tax system would include:

- Households who didn't pay income taxes last year would see no change.

- Individuals would pay 10 percent on their first $50,000 of income and couples would pay 10 percent on their first $100,000.

- Everything above that would be taxed at 25 percent.

Pawlenty would also cut the business tax rate from 35 to 15 percent.

The former Minnesota governor also said that the government should not be involved in any service that is available privately, such as the U.S. Postal Service or mortgages.

Trying to appeal to small-government conservatives, he has suggested what he called "The Google Test."

"If you can find a good or service on the Internet, then the federal government probably doesn't need to be doing it," Pawlenty said.

"The post office, the government printing office, Amtrak, Fannie and Freddie were all built for a time in our country when the private sector did not adequately provide those products," he said. "That's no longer the case."

He said America must not just cut tax rates, but must promote freedom and free markets.

Pawlenty proposes that taxes on investments, bank interest, stock dividends, and inheritances should all be zero.

"Government has no moral or economic basis to claim a second share of the same income. When you deposit a dollar in your bank account, every penny should be forevermore yours and your children's, not the federal government's," he said.

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