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Presidential Issues: Taxes


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Details and Analysis of Senator Rick Santorum’s Tax Plan

October 14, 2015

By Alan Cole

This week, former Senator Rick Santorum released details of a tax reform plan. This plan would institute a flat 20 percent tax rate on all varieties of individual income. It would also consolidate all deductions into a single $2,750 per person credit, which would be refundable up to the amount of an individual’s earned income. The plan would also reduce the corporate income tax to that same 20 percent rate. In addition, the plan would eliminate the estate tax and the Alternative Minimum Tax.

Our analysis finds that the plan would reduce federal revenues by $3.2 trillion over the next decade. However, it also would improve incentives to work and invest, which would increase gross domestic product (GDP) by 10.2 percent over the long term. This increase in GDP would translate into 7.3 percent higher wages and 3.1 million new full-time equivalent jobs. After accounting for increased incomes due to these factors, the plan would reduce tax revenues by $1.1 trillion.

Individual Income Tax Changes

  • Consolidates the current seven tax brackets into one bracket at 20 percent on all personal income.
  • Eliminates the personal exemption and standard deduction.
  • Taxes long-term capital gains and qualified dividends at ordinary income tax rates.
  • Eliminates all itemized deductions except for the home mortgage interest deduction and the charitable deduction. Places a tighter cap on the home mortgage interest deduction.
  • Eliminates the Alternative Minimum Tax.
  • Eliminates the Net Investment Income Tax of 3.8 percent and the Medicare surtax of 0.9 percent, which were passed as part of the Affordable Care Act.
  • Creates a refundable tax credit, replacing the current earned income tax credit, of $2,750 per person, not to exceed the filer’s earned income.
  • Preserves the exclusions from income of pension contributions, employer-provided health premiums, and imputed rent, similar to current law.

Read the full article at the Tax Foundation: Details and Analysis of Senator Rick Santorum’s Tax Plan

Issue Categories : Rick Santorum, Taxes