The first official Republican presidential debate kicks off tonight. Ten of the seventeen candidates made the cut, a cut determined based on an average of the five most recent national polls. Participating tonight are real estate magnate Donald Trump; former Florida Governor Jeb Bush; Wisconsin Governor Scott Walker; former Arkansas Gov. Mike Huckabee; retired neurosurgeon Ben Carson; Texas Senator Ted Cruz; Florida Senator Marco Rubio; Kentucky Sen. Rand Paul; New Jersey Governor Chris Christie; and Ohio Governor John Kasich.
The presidential hopeful pool is crowded. One of the main issues that will set these candidates apart is tax reform. Over the course of the next few weeks, we’ll examine where each of these candidates, and their Democratic contenders, stand on taxes. Some have unveiled detailed proposals; others have spoken more generally. But consider this your first “cheat sheet” for the upcoming election and tonight’s debate.
Listed alphabetically, here’s a brief summary of views on taxes/tax reform of the Republican top 10:
Jeb Bush
The former Florida governor said just this week at a donor summit that he would not consider raising taxes even as part of a grand bargain to cut the deficit. That’s a shift for Bush, and likely an attempt by him to expand his appeal beyond the GOP establishment. In June 2012, Bush told the House Budget Committee that he would back a deal that would include $1 in tax increases for $10 in spending cuts. But now that he’s running for president, he has declared without question that there will be no new taxes.
At the same dinner, Bush reiterated his goal of growing the gross domestic product at 4% each year, claiming that this would bring in more money than any tax increase. Bush is pushing for entitlement reform, curbing the growth of spending, and creating a high growth scenario.
As far as overall tax reform, Bush has been fairly tightlipped. His calls for a “vastly simpler system” and “clearing out special favors for the few, reducing rates for all” are vague. Until he comes out with something more specific, we’ll have to rely on his record as governor which has focused on lopsided tax cuts.
Ben Carson
Carson advocates a flat tax -- 10% specifically. On Fox News Sunday back in May, Carson rejected host Chris Wallace’s information from the Tax Policy Center that in order for the government to raise as much money as it does now the flat tax rate would have to be higher than 20 percent. Carson claims that elimination of loopholes and deductions could allow for a flat tax rate between 10-15%. A flat tax, Carson says, would help the government run like a business rather the “great inefficient behemouth that we have now.”
Carson is calling for wholesale tax reform. He wants a fairer, simpler, and more equitable tax system, and calls for the end of the IRS as we know it.
Chris Christie
The New Jersey Governor has proposed a reduction in federal income tax brackets from six to three, and a top tax rate of 28% (a more than 10% reduction from the current rate of 39.6%). The bottom rate would be an unspecified single digit rate. Christie plans to pay for the tax cuts through cutbacks and eliminations of various tax deductions and credits. Christie would also authorize a one-time repatriation holiday for U.S. companies at 8.75%
Ted Cruz
Cruz has been gunning to abolish the IRS since going to Washington two years ago. Cruz is campaigning on a flat tax that “would allow every American to fill out his or her taxes on a post card…”. He says he envisions shifting the tracking and collection of federal taxes to a smaller division of the Treasury Department. Replacing the current, complex tax code with a simple flat tax would eliminate most of the work the IRS needs to do, making it obsolete.
Cruz’s flat tax plan might allow some deductions, possibly for popular write-offs like charitable donations and mortgage interest charged on a homeowner’s primary residence. He has yet to be specific on just what those deductions would be, but in this way, his flat tax plan is a bit more flexible that his counterparts.
Mike Huckabee
Huckabee speaks of a tax “revolution” that would help all Americans and eliminate the IRS. He wants the “FairTax”.
The FairTax is a proposed national retail sales tax that would replace all federal taxes. Huckabee claims it would lower everyone’s tax rates by broadening the tax base (everyone buys goods so everyone pays taxes). The tax is designed to protect low-income people from higher taxes via a large new cash transfer program called a “prebate.” Every household would get a cash transfer equal to the amount of tax that a family at the poverty level would owe.
Critics claim the problem is that very high-income households spend only a fraction of their income, while low- and middle-income people spend all or most of what they make. A sales tax, by design, exempts a large share of income at the top. If it includes a prebate to protect people at the bottom and doesn’t add to the deficit, then it must raise taxes on people in the middle. Regardless of how it plays out in Huckabee’s mind, we don’t yet have a true sense on just what rate would be charged for the FairTax.
John Kasich
Kasich’s presidential plan stands in stark contrast to the plan he proposed as governor, which included steep tax hikes.
Kasich wants the corporate tax lowered. Instead of hikes like the sales tax proposals in OH, Kasich is considering a federal tax plan that would eliminate special loopholes for business groups. He wants to cut the federal income tax for corporations and individuals. To do this, Kasich just might adopt the flat tax plan of Steve Forbes. So far he’s only spoken in generalities and has yet to announce a comprehensive plan.
Rand Paul
The Senator from Kentucky is perhaps the most vocal tax reform advocate and desires to completely revamp the existing tax code. Paul seeks a 14.5% flat tax on individuals and businesses. The tax rate for individuals would apply equally to all forms of personal income -- ranging from wages to capital gains and dividends to other types of investment income -- while the first $50,000 of income for a family of four would be exempt. A 14.5% flat business tax would apply to business income, less qualified expenses. Paul would also repeal payroll taxes and all estate and gift taxes.
Marco Rubio
Earlier this year the Florida governor said he would cut the number of tax brackets for individuals down to just two of 15% and 35%, consolidate various family-based credits and deductions; eliminate all deductions except a revised mortgage interest deduction and charitable contribution deduction; repeal the alternative minimum tax (AMT) and revamp the Earned Income Tax Credit (EITC). For businesses, Rubio would provide full and immediate expensing, tax corporation and pass-through entities at the same 25% rate and repeal provisions deemed to be “extraneous”. Rubio would also allow tax provisions that expired last year to lapse without any extensions.
Donald Trump
Leading the polls is the high-profile real estate mogul who may just possibly end up running as an independent. Trump hasn’t released any detailed tax proposals but did speak years ago in about installing individual tax rates ranging from a low of 1% to a high of 15%. He also spoke about repealing both the corporate income tax and estate tax, reducing the tax rate on capital gains and dividends and imposing a 20% tax on imported goods and a 10% tax on companies outsourcing jobs overseas. Whether Mr. Trump will run on such a platform remains unclear.
Scott Walker
Walker is pitching himself as a fiscal hawk who wants lower taxes, cuts in federal spending, and less government assistance. He is vowing to eliminate the sequester cuts restraining Pentagon spending, and tackle federal budget deficits by reforming entitlement programs and returning money and power to the states.
Mr. Walker also believes in unleashing the economy through a series of across-the-board tax cuts. He has cited his record in Wisconsin, where he has signed 15 measures reducing the tax burden by nearly $2 billion.
As for specific tax levels, Walker wants to return to the 1986 cuts enacted under Ronald Reagan, where the top tax rate was reduced from 50 percent to between 28 and 33 percent and many brackets and deductions were simplified.
Seven remaining Republican contenders remain and we’ll cover them and the Democrats in the coming weeks. In the meantime, expect robust debate as the presidential race takes shape.