Michael Tanner of the Cato Institute outlines for National Review Online readers differences among tax plans put forward by Republican presidential hopefuls.
As is the case with most issues, the two most detailed plans released so far belong to Senators Marco Rubio and Rand Paul. Rubio is the co-sponsor, with Senator Mike Lee, of the Economic Growth and Family Fairness Tax Reform Plan, which would reduce taxes by roughly $4 trillion over the next decade (on a static basis; dynamic scoring suggests the revenue loss would be somewhat less). The plan would reduce the number of tax brackets to just two, 15 and 35 percent, while eliminating nearly all itemized deductions and replacing the current standard deduction with a fully refundable personal credit, plus a new $2,500-per-child exemption. On the business side, the bill would reduce the corporate tax rate to 25 percent, again while eliminating most current deductions. It would, however, allow full deductibility for investments in the year in which they are expensed. It would also adopt a territorial tax system, exempting foreign income of U.S. corporations. The plan has been criticized by some supply-side and business-oriented economists for leaving marginal tax rates too high, and not being sufficiently growth-oriented. Rubio and others, notably reformicons, see it as a family-friendly and middle-class-oriented tax cut.
Rand Paul posted a detailed plan on his campaign website a couple of months ago, but he has since taken it down amid reports that he is revising it to lower rates even further. As originally posted, Paul’s plan would establish a 17 percent flat tax; however, he is reportedly working with Stephen Moore of the Heritage Foundation and others to bring that rate down to as low as 13 or 14 percent. The plan would also include a personal exemption, unlike most flat-tax plans, thereby lowering the effective tax rate still further. The size of the exemption was not spelled out, but according to some reports it could be as much as 20 percent. Capital gains, interest, and dividends would all be untaxed. The estate, gift, and alternative minimum taxes would all be eliminated. Paul also plans a payroll-tax exemption for low- and middle-income earners, though he has not provided details, and such a cut could complicate financing for Social Security. And Paul also proposes even larger tax cuts for high-poverty areas.
Click the link above for Tanner’s analysis of tax ideas from Ted Cruz, Chris Christie, Jeb Bush, Mike Huckabee, Scott Walker, Rick Perry, Ben Carson, and Carly Fiorina (in that order).
