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A Look at the Free Market Credentials of the GOP Candidates’ Tax Plans

Wednesday night’s CNBC GOP debate was touted as economic-centric. It ended up being more about the moderators baiting the candidates with ridiculous and biased questions, such as John Harwood’s query to Mick Huckabee as to whether Donald Trump has the “moral authority” to lead the nation.

But there needs to be some serious discussion of economics injected into the primaries beyond the lip service paid to conservative bromides about lowering taxes and cutting government. Especially since this latter tenet of free market principles has been largely missing from GOP discussions of fixing the ongoing economic malaise. And the only way to truly balance the budget, cut deficits and lower the tax burden, not to mention return the federal government to its Constitutional restraints, is to slash federal bureaucracy. Any truly serious conservative economic plan must include language that provides for both tax reform and a reduction in the size of government.

So where, in their own words, do candidates stack up against the dual capitalistic pillars of private dominance of markets and low rates of taxation?

Ted Cruz

Cruz is a flat tax proponent. His institution of a 10% rate, which exempts the first $36,000 for a family of four, is decidedly capitalistic. It is enhanced by the elimination of the corporate tax structure and the institution of a 16% flat business tax. Cruz also eliminates the death tax and the alternative minimum tax. The Tax Foundation estimates this plan would cut $3.6 billion over the next decade, providing it is consistently implemented, and would reduce tax revenue by $768 billion over the same period of time, leading to a 13.9 percent rise in GDP.

While Cruz boasts of eliminating the IRS, easing regulations and making Washington work for the American people through the simplified code, he is disappointingly mum on specific plans to do so. Certainly Cruz often talks about abolishing federal departments, but this is not the same as presenting an actionable plan to do so.

Carly Fiorina

Fiorina alarmingly has no specific tax plan. During the CNBC debate, she responded to a question about tax reform by lamenting conservatives have been talking about tax reform for decades but have never been acted on them. Fiorina’s criticism might ring a little less hypocritical if her answer- nearly word for word identical to an answer she posted on her website to a question about the fair tax- had some meat to it. Her only specific reform is to reduce the tax code to three-pages, the maximum length she asserts is comprehensible to all citizens. Besides being extremely denigrating to the intelligence of Americans, this fails to address the real issue with the tax code: despite bringing in larger and larger revenues every year from nearly every activity citizens can engage in, deficits grow.

Lindsey Graham

Given that Graham seems to interested in talking about nothing other than his desire to form a Middle East coalition to eradicate ISIS, it’s somewhat surprising that the South Carolina senator has a tax plan. Even more shocking given Graham’s progressivism, his plan involves a flattening of the tax code. Though Graham does not lay out specifics, he does mention lowering both individual and corporate rates as well as eliminating loopholes and instituting sunsets on federal regulations. However, much like Graham’s other positions, this is all nebulous platitudes and no specifics. As such it can hardly be given much credence as a viable free market plan, especially since he has repeatedly cited a need to save dysfunctional federal programs like Social Security.

Mike Huckabee

Huckabee has actually long been a proponent of abolishing federal income, capital gains and estate taxes and instituting a national sales tax. His so-called “FairTax” would be assessed at 23% and would offer monthly income credits for low-income families. A fair tax, much like a value-added-tax is sometimes promoted by capitalists as being fair since individuals pay proportional to the goods and services they consume.

However, though Huckabee touts the job creating effects this broadening and lowering of the tax base would have, he also talks about protecting Social Security and Medicare, programs which unfairly take money out of the pockets of hard working Americans. Nor does the former Arkansas governor have any proposal as to how to reform these programs, which require much more involved economic fixes than bringing in more tax revenue.

Bobby Jindal

Jindal’s tax plan keeps the current progressive income tax configuration, but does significantly flatten rates and brackets. His tax would assess rates of 2%, 10% and 25% on income and capital gains. Jindal’s stated goal is to make every American pay taxes so they have “some skin in the game.” This concept, which ideally forces people to make more responsible choices by giving them a viable economic interest in federal policy, is appealing. Though the Tax Foundation estimates this would lead to a 14.4 percent growth in GDP over the long term, their analysis also suggests it would add to the deficit.

However, perhaps the best part of Jindal’s plan is his stated goal to cut federal spending by 22%, or $9 trillion. Jindal frequently uses language that sets the “American economy” against the “government economy,” which is a recognition of the clash between public and private sectors. He is the only candidate to so strongly use such free market language and to directly tie a reduction in taxes with a reduction in the size of government.

Jeb Bush

Bush’s plan also consolidates the current progressive tax rate into three brackets- 10%, 25% and 28%. He would also lower the corporate rate to 20%, which he specifically mentions is lower than China’s, and eliminate many loopholes in an attempt to “equalize the playing field.” The alternative minimum and death tax would also be eliminated. The Tax Foundation estimates this would lower revenue by $3.6 trillion and increase GDP by 10% in the long term.

However, though he touts this plan’s job creating benefits, Bush’s alarmingly pro-regulation attitude threatens to negate whatever good would be done. In the CNBC debate he responded with enthusiasm to a question about whether fantasy sports should be treated as gambling, even going so far as to compare the cash-rich industry to insider day trading, though he drew a bizarre line between the appropriateness of federal investigation and regulation. This incoherent position certainly indicates a willingness to involve the government in far-reaching activities that does not bode well for any reductions in the size and scope of its powers..

Ben Carson

Carson had an exciting moment during the CNBC debate where he talked about the lack of necessity for funding all 645 federal agencies, suggesting he understands tax reform must be coupled with government reform. However, Carson has no specific tax plan. He has voiced support for a flat tax based on a tithing model and even detailed a plan in media interview for giving overseas businesses a “tax holiday” to incentivize them to move back into the country. A lot of Carson’s appeal is on his outsider status. If he can produce a detailed tax plan that is as appealing as his media talking points, he might be able to seal the deal for many disgruntled conservatives.

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Chris Christie

Perhaps the most interesting part of Christie’s plan is his proposal to eliminate the payroll tax on Social Security for those over 62 and over 25. He claims this will incentivize people to both enter and stay in the workforce, presumably leading to a stimulation in the private sector that will boost the economy. Like others, Christie flattens the tax rates into three brackets, the highest being 28%, and lowers the corporate tax rate.

But Christie’s plan also outlines a need to boost American innovation, which Christie ties to education. This is language that almost certainly augurs federal subsidies of education. He also discusses developing new energy technologies, another ill omen given the Obama administration’s abysmal record of subsidizing failing green energy. Should these pledges materialize as new spending initiatives they will almost certainly undo whatever good comes from lowering tax rates.

John Kasich

Kasich touts himself as a budgeting wizard, bragging about how he was instrumental to balancing the federal budget during his time as chairman of the House Budget Committee, a feat that actually did not occur as outlined .

But while he belabors the need for “creative budgeting” and rips the plans of other candidates, his is remarkably cut and dry and similar to those of his fellow establishment running mates. Kasich reduces the corporate tax rate to 25% and establishes three income tax brackets, with a top rate of 28%. To his credit, Kasich does offer specific plans for balancing the federal government, including downsizing and streamlining the Department of Transportation and the Department of Education. However, this fiscal responsibility is at odds with his insistence on saving Medicare and Medicaid. Kasich has repeatedly taken a nasty, morally righteous tone when discussing this, even going so far as to accuse other candidates of “scaring” senior citizens.

Rand Paul

Paul, a dyed-in-the-wool libertarian on economics, wrote his plan with former Reagan guru Art Laffer, author of the famous “Laffer Curve,” so it’s not surprising how drastically the pair cut taxes. Not only does Paul establish a 14.5% flat tax applicable to all personal income, exempting the first $50,000 on families of four, he lowers the corporate tax rate to the same rate. Like others, Paul eliminates estate taxes, payroll taxes, and perhaps most interestingly, all duties and tariffs.

By far the most detailed plan, the Tax Foundation estimates this would grow GDP by 12.9 percent over 10 years and provide enough economic incentive to create 4.3 million jobs. However, it is estimated to cost the Treasury nearly $2 trillion dollars over the same time period. Obviously, massive spending cuts are necessarily to make this economically viable, a fact Paul admits. However, though Paul touts a Balanced Budget Amendment to enable this and often talks about abolishing federal agencies, he does not outline a specific plan for doing so.

Marco Rubio

Rubio also consolidates the tax code into three brackets- 15%, 25% and 35%- and reduces the corporate rate to 25%. He also eliminates capital gains, the alternative minimum tax and the estate tax. As the debate about whether paid family leave is a “moral imperative” rages on amongst labor advocates, Rubio apparently looks to appease this by offering a 25% tax credit to offering paid family leave between 4 and 12 weeks. To true free market advocates, this certainly smacks of government meddling in business practices. Rubio’s bid to end out-of-control federal spending is similarly lackluster. It contains familiar promises to add a Balanced Budget Amendment to the Constitution, institute a presidential line-item veto and reform costly entitlements like Social Security. But he presents no specifics for so doing.

Rick Santorum

Santorum has touted his “20/20 Flat Tax” plan in every single debate thus far. It institutes a 20% flat tax on all areas of individual income, repeals the alternative minimum tax and death tax and ends almost every individual deduction. The same rate is assessed on business taxes and Santorum promises to abolish the IRS. The Tax Foundation estimates this would create 3.1 million jobs over the next decade, grow GDP by 10.2 percent and reduce revenue by $3.2 trillion.

Perhaps unsurprising given Santorum’s “blue collar conservatism” attitude, the plan is rife with language that protects workers. Santorum is vocal about his belief that American jobs are the key to economic growth. Unfortunately, his belief in the need to level the economic playing field leads him to support the Import-Export Bank. What is in fact corporate cronyism for government-favored industries he touts as a great equalizer. This attitude betrays a willingness to use the organs of governments to achieve parity in business, an attitude which is decidedly not free market and problematic given that it likely means an increase in spending, making reducing tax revenue politically problematic.

Donald Trump

Trump’s plan is, on its, face economically absurd. By his own admission, over 50% of American households- single-earners making under $25,000 and joint-filers making less than $50,000- would pay no income tax. The remaining earners would be taxed at either 10%, 20% or 25%. The corporate tax is lowered to 15% and the death tax is eliminated. Trump claims this plan is revenue neutral, but the Tax Foundation estimates not only would it decrease tax revenue by approximately $1o trillion over the next decade, it would also lead due increased outlays from higher interest on the debt, further increasing the deficit. It would grow GDP by11.5% and create 5,329 jobs.

The problem, however, is that it is a political disincentive to over half of America. Many lower-income Americans will draw federal benefits without having to contribute to the cost of these policies. This is reckless. Nor has Trump outlined any plan for cutting the size of government or dealing with the exigent crises of soon-to-be bankrupt entitlement programs. In fact, besides his absurd economic plan, Trump has only two other outlined policies and neither of these suggest a willingness to shrink the size of government, something he must do drastically to make his plan economically viable.

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About Katherine Revello

A recent graduate of the University of Maine, where she majored in journalism and political science, Katherine Revello is an aspiring political commentator. Her focuses include theory, the philosophy of money and populism. Currently, she is a graduate student at Villanova University. She is the founder of The Politics of Discretion, a blog dedicated to advancing her philosophy of discretionism. Follow her on Twitter: @MrsWynandPapers