While everyone else was reporting yesterday’s duelling games of neener-neener (one’s still unfolding!), Jon Huntsman announced his 12-page economic plan. The biggest component: Tax reform that eliminates the AMT, cuts corporate taxes from 35 to 25 percent, and crunches income taxes into “a revenue-neutral plan that eliminates all deductions and credits in favor of three drastically lower rates of 8 percent, 14 percent and 23 percent.”
That’s a little like the Wyden-Coats plan, isn’t it? A little: Wyden-Coats’s rates are 15 percent, 25 percent, and 35 percent. Both that plan and Huntsman’s plan are revenue neutral. How? Wyden-Coats closes loopholes but lets some current tax benefits survive. As Seth Hanlon explains, Huntsman doesn’t, which effectively means the end of the Earned Income Tax Credit and taxes on Social Security benefits.
Where does the 8/14/23 number come from? From the Huntsman doc:
Gov. Huntsman supports a version of the plan crafted by the Fiscal Commission, headed by Erskine Bowles and Alan Simpson, commonly known as the “zero plan.”
Hanlon catches something here: Bowles-Simpson did not actually suggest a “zero plan.” As an example of how tax reform works, they wrote that “a ‘zero plan’ could reduce income tax rates to as low as 8 percent, 14 percent, and 23 percent” if only tax breaks for home-owners, poor people, etc were killed off. But their own “illustrative plan” was for tax rates of 12 percent, 22 percent, and 28 percent, high enough to keep the EITC and other goodies.
So: Huntsman’s proposing something so conservative that it was basically a back-of-the-napkin example in Bowles-Simpson. Are reporters getting this? Ha, ha. Here’s how Politico reported on the plan:
Echoing the bipartisan plan crafted by the Simpson-Bowles Commission, Huntsman proposed consolidating the sprawling system into three lower individual tax brackets at 8 percent, 14 percent and 23 percent.
Nope! The Orlando Sentinel:
Huntsman endorsed budget recommendations made last year in the bipartisan Simpson-Bowles Commission and the budget-cutting plan announced last spring by U.S. Rep. Paul Ryan, which called for cost-containing overhauls in Medicaid, Medicare and Social Security.
Sort of. What about the LA Times?
His tax proposal, a modified version of the “zero” option in the Simpson-Bowles report, would make the income tax system more progressive by reducing the after-tax income of the wealthiest 1% of taxpayers, and especially those in the top 0.1%, according to an analysis of the 2010 proposal by the nonpartisan tax policy center of the Brookings Institution and the Urban Institute.
At the same time, Huntsman called for elimination of the taxes on capital gains and dividends, which would disproportionately benefit wealthy Americans. Huntsman said during a brief news conference afterward that his campaign had not yet fully analyzed the effects of his economic proposal.
Paul West gets the blue ribbon. Let’s say Huntsman wins the nomination – perhaps, keeping with their patterns, news networks exclude every candidate but him from the debates. This stops being a bold tax plan and starts being tax hikes on poor people.
