Politics Magazine

GOP Tax Plans Just Benefit The Rich (& Increase Debt)

Posted on the 13 November 2015 by Jobsanger
Plans Just Benefit Rich Increase Debt) (The cartoon image above is by Ed Stein at edsteinink.com.)
The Republican candidates are all introducing their plans to improve the economy. But those plans involve little more than introducing new tax plans. They ignore the fact that taxation has historically had little to nothing to do with the economy (or job creation). All you have to do to know this is look at the 1950's which had a booming economy in spite of a huge top tax rate -- and the Bush administration which had a poor economy declining into recession in spite of the lowest top tax rate since World War II.
Some of the most popular plans among Republicans are the flat tax proposals. They tout this as being fair to all Americans. It is not. These plans (and other GOP plans) would lower taxes significantly for the rich, while increasing taxes on working and middle class Americans. All of the plans would also hugely increase the deficit and national debt.
That is not just my view of those plans. Note below the opinion of John W. Schoen at CNBC. Here is part of what he had to say about the GOP tax plans:
So far, four of the GOP candidates have proposed flattening the tax system to a single rate, all of which would eliminate trillions of dollars in tax revenue needed to balance the federal budget. Carson, who originally proposed a flat 10 percent on personal and business income, has recently upped that to 15 percent.  But, as CNBC's Becky Quick noted in the Oct 28 debate, the proposal would leave a roughly $1 trillion hole in the federal budget, an analysis confirmed by Politifact, a website devoted to fact-checking candidate claims.  The math underpinning the other candidates' flat tax proposals are equally problematic, according to the Tax Foundation analysis. Cruz, for example, has called for a 10 percent flat tax on personal income and a 16 percent tax on businesses.  "The revenue loss under this plan, using reasonable rather than insane estimating assumptions, would be absolutely staggering," according to a blog post by New York University law professor Dan Shaviro, who has written about tax policy.  Other researchers agree. An analysis by the Tax Foundation, which Cruz has cited, found that his flat tax proposal would create a $3.6 trillion shortfall over the next decade.  Paul wants a flat 14.5 percent tax on personal and business income, a plan that would lose $1.8 trillion over 10 years, the Tax Foundation found. Even at a 20 percent flat tax rate, former Pennsylvania U.S. Sen. Rick Santorum's tax plan would come up short by $1 trillion, according to the research group.  The candidates argue that the deep losses in revenue would be offset because tax cuts would spur growth and create more jobs which, in turn, would generate more taxes. But that assumption doesn't take into account the impact of larger federal budget deficits or potential spending cuts on the overall economy. (Widening deficits would almost certainly increase pressure to cut government spending, which would create a drag on economic growth.)  While the flat tax plans don't add up, the other GOP candidates' tax proposals don't hold up any better. The Tax Foundation's recent analysis estimated a $10 trillion budget shortfall over 10 years from Donald Trump's plan. Former Florida Gov. Jeb Bush's tax plan would leave a $1.6 trillion revenue gap; Louisiana Gov. Bobby Jindal's plan would create a $9 trillion revenue deficit. In response, many of the candidates argue that multitrillion-dollar tax shortfalls could be offset by major cuts in government spending. Paul has said repeatedly he wants "a government so small I can hardly see it."  But few of the candidates' tax proposals even hint at where those spending cuts would come from. (On Tuesday, Cruz said he would simply eliminate five government departments altogether.)  One of the more popular government agencies targeted for elimination is the Internal Revenue Service, which Paul and Cruz have promised to shutter if elected.  While the idea may be popular with many voters, it's just not realistic, according to Kyle Pomerleau, a Tax Foundation researcher who has analyzed the candidates' tax plans.  "At its core, the IRS is the agency that collects taxes," he said recently in a blog post. "As long as the government collects taxes, some agency will exist to carry out that task."

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