The Post’s Karen Tumulty and Perry Bacon Jr. note in this morning’s paper that the Republican presidential candidates have come out with some wide-ranging tax proposals.
But just what’s in those tax plans, and how do they differ? The Fix explains in detail below. (And check out this helpful infographic.)
Cain’s “9-9-9” plan would replace the current tax code with a 9 percent income tax, a 9 percent sales tax and a 9 percent corporate tax. Some conservatives have balked at the idea, for fear that the sales tax — a wholly new tax — could be increased in the future. Cain has also been criticized from the left for creating a system that experts say would raise taxes on most low- and middle-income Americans. In response, Cain said last week that he would create exemptions for those living at or below the poverty line, saying they would not have to pay income tax. He also said businesses investing in “opportunity zones” in need of development would not have to pay the corporate tax.
The former Massachusetts governor’s 59-point jobs plan, explained in a 160-page book, includes a number of changes to the tax code, along with some broad long-term goals to reform it. Included in Romney’s tax provisions: he would lower the corporate tax rate from 35 percent to 25 percent; eliminate taxes on dividends, capital gains and interest for Americans making less than $200,000 annually; eliminate the estate tax; institute a territorial corporate tax system (like Perry’s); and push for a more simplified and flatter tax system. Romney has previously balked at the idea of a completely flat tax, saying it favors the wealthy. This could be a significant point of contention between him and Perry.
Gingrich is challenging Perry to a flat tax battle (is that like break dance fighting?), and the former House speaker has a side-by-side comparison on his Web site. Gingrich’s plan also would be optional. Among the differences: Gingrich’s rate would be 15 percent rather than 20 percent; would lower the corporate income tax to 12.5 percent rather than 20 percent; would not allow taxpayers to deduct state and local income taxes from their federal taxes; would keep the dividends, capital gains and interest exemptions for everyone, including those making more than $500,000 annually; and would replace the payroll tax with personal investment accounts. Perry’s camp has criticized the lack of a deduction for state and local income taxes, but Gingrich says it’s unnecessary because of the lower overall tax rate.
The former Utah governor’s plan would also simplify the tax system, reducing the corporate tax from 35 percent to 25 percent; eliminating all deductions and credits on individual income taxes and replacing them with tax rates of 8 percent, 14 percent and 23 percent; eliminating the alternative minimum tax; and getting rid of taxes on dividends and capital gains.
The Texas congressman’s “Plan to Restore America” contains several tax provisions: it would get rid of the individual income tax and the Internal Revenue Service; lower the corporate tax rate to 15 percent; get rid of the estate tax; end taxes on personal savings and tips; eliminate the dividends and capital gains taxes; and increase tax credits and deductions for education, health care and energy-efficient vehicles.
The Minnesota congresswoman has stated that she would abolish the current tax code and institute a flatter and fairer tax. She has not come forward with a detailed plan as of yet, but she accused Perry on Monday of imitating her own ideas on taxes. She has also said she wants to re-institute the Reagan tax plan of the 1980s and that every American should pay some taxes — even if it’s just $1.
The former Pennsylvania senator has dismissed both Cain’s 9-9-9 plan and a flat tax. He said this week that he would reduce rates but not go to just one rate, and that higher income earners should pay a slightly higher percentage. He also said he wants to cut the corporate tax for manufacturing from 35 percent to zero and eliminate the excise tax on overseas profits.