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