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Taxes—the Devil Is in the Details

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Originally posted June 4, 2015.

Although it is still early in the presidential campaign and fully detailed plans are not expected for a while, Cato Institute’s Michael Tanner writes that there are enough clues to grasp a general idea of each candidate’s leaning. “All the 2016 candidates want to cut taxes—but which taxes, and by how much?”

As Michael points out, senators, unlike governors, have no track record on taxes.

The Senators:

Rand Paul. A previous detailed plan of a 17% flat tax has been taken down from Rand Paul’s website. He is reportedly working with the Heritage Foundation’s Stephen Moore on a plan to bring the tax rate down to as low as 13-14%. Unlike most flat-tax plans, it would also include a personal exemption, thereby lowering the effective tax rate even further.

Marco Rubio. Reduce the number of tax brackets to just two—15% and 35%. Eliminate nearly all itemized deductions and replace current standard deductions with a fully refundable personal credit, along with a new $2,500-per-child exemption. Reduce the corporate tax rate to 25% and eliminate most current deductions.

Ted Cruz. Although he has no full tax plan, he has talked about abolishing the IRS and hinted at some type of flat tax that would still allow certain deductions for charitable contributions and mortgage-interest payments.

The Governors:

Chris Christie. Simplify the income-tax system to just three individual rates, with the top rate no higher than 28% and the bottom rate in the single digits. Cap the total amount of deductions and credits that an individual or married couple can take. Also cut the corporate tax rate to 25%, and perhaps eliminate payroll taxes for those over 62 and under 21.

Jeb Bush. From Cato’s 2006 biannual fiscal report card: “Jeb Bush leaves office with a well-deserved reputation as one of the most aggressive tax cutting governors in the nation. He has proposed and signed into law a tax cut virtually every year of his tenure, ranging from cuts in property taxes to a phase-out of the intangibles tax.” It must be noted, however, that J.B. is the only Republican candidate not to have signed Grover Norquist’s pledge to the American people not to raise taxes.

Mike Huckabee. A “dreadful” tax record as governor, rating a D on Cato’s report card for his entire tenure and an F for his final term. Currently M.H. is advocating the Fair Tax, which is a form of national retail sales tax, “although he has been vague about the rate.”

Scott Walker. Amongst the running governors, perhaps the best record (despite some weakness on spending), rating a B from Cato. S.W. would “slash the marginal tax rates for everyone across the board — go to a simpler, more flat tax.”

Rick Perry. Not far behind S.W., also earning a B from Cato. In 2012, R.P. proposed a system that would allow taxpayers to choose between the current tax system and a 20% flat rate, whichever was lower.

No Previous Electoral Experience:

Ben Carson. Calling for a flat 10% to 15% tax.

Carly Fiorina. No details, but calling for a simpler tax code and tax cuts to spur innovation.

For Michael Tanner’s full commentary on each of 2016 GOP contender’s leaning on taxes, go here.

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Debbie Young

Debbie, editor-in-chief of Richardcyoung.com, has been associate editor of Dick Young’s investment strategy reports for over three decades. When not in Key West, Debbie spends her free time researching and writing in and about Paris and Burgundy, France, cooking on her AGA Cooker, and practicing yoga.