This item has been updated.
Just three tax brackets. No more taxes on death or marriage. Tax cuts for major corporations and small businesses and about 42 million families.
Republican presidential candidate Jeb Bush on Wednesday unveiled a long-awaited tax reform plan that would add trillions of dollars to the deficit, filling in details that he says would help fulfill his promise to restore 4 percent annual economic growth. With a North Carolina factory as his backdrop, Bush married traditional conservative thinking on taxes with some politically viable proposals that already enjoy support on Capitol Hill.
The plan would add $1.2 trillion to the deficit, even when using a system favored by Republicans that takes into account any potential growth the tax changes could encourage, according to Republican economists who reviewed the plan on Bush's behalf. The plan would lose closer to $3.4 trillion using traditional methods.
Given the high price tag and some of the details, Bush's tax plan is fraught with political peril. His brother, former president George W. Bush, focused much of his 2000 presidential campaign on plans to slash taxes and jump-start economic growth. Those tax cuts contributed to the record deficit spending that even Jeb Bush criticized Tuesday night on Stephen Colbert's new late-night talk show. In 2012, GOP presidential nominee Mitt Romney had similar ideas on tax reform that were widely dismissed by voters, who believed he was pushing policies that would mostly help wealthy people.
So Bush is also embracing an idea also backed by GOP frontrunner Donald Trump and Democrats, including President Obama and Hillary Rodham Clinton. He would end a lucrative tax loophole for hedge fund and private equity managers that lets them avoid billions of dollars in taxes by treating their income as capital gains instead of salaries.
"My plan works whether you're on Main Street or Wall Street – no special favors, no special breaks," he told workers and invited supporters at Morris & Associates, an industrial refrigeration company in Garner, N.C.
Bush described the current tax code as "a disaster."
“It punishes people for doing things we should encourage and rewards people for doing things that may not be so good," he added. "It taxes paychecks hard but gives companies a write-off for debt. The current tax code makes it easier to borrow than to build. I believe it’s time we build for the future, not borrow from it."
Later, he explained his plan by using what he claimed was a common Florida phrase: "We need to let the big dog eat. We need to focus on creating a fair environment, and then let people pursue their dreams as they see fit."
If Bush becomes president, he would seek to condense seven tax brackets into three: 10 percent, 25, percent and 28 percent. He would slash the corporate tax rate to 20 percent, end the Alternative Minimum Tax, the estate tax and the so-called marriage penalty tax, while continuing deductions for charitable giving. Bush also would cut home mortgage deductions to just 2 percent and eliminate state and local tax deductions, essentially goading local governments to slash high tax rates.
Independent assessments of the total cost of Bush's proposals weren't immediately available. But in advance of its release, the Bush campaign asked four GOP economists -- John Cogan, Martin Feldstein, Glenn Hubbard and Kevin Warsh -- to analyze the plan. Buried within their 17-page analysis was the trillions-dollar price tag. Notably, they did not factor for Bush's goal of 4 percent economic growth, instead presuming that an additional 0.5 percent per year in growth would come from the tax plan and another 0.3 percent from proposed regulatory reforms. That would still leave the U.S. economy short of 4 percent annual growth.
Bush spokeswoman Allie Brandenburger dismissed the traditional scoring of such plans as "antiquated" and "irrelevant, except to partisan liberals who think that we can tax our way to prosperity."
Bush’s plan is one of the least aggressive in the GOP field, in terms of tax cuts — far behind the flat-tax proposals from Sens. Ted Cruz (R-Tex.) and Rand Paul (R-Ky.) and former neurosurgeon Ben Carson, among others. But it also tracks with the way the GOP-controlled Congress generally talks about tax reform.
Democrats quickly dismissed Bush's ideas as "an even more extreme plan than his brother’s."
"Just as he did in Florida, Bush is embracing a disastrous economic agenda that benefits himself, and those like himself, while leaving the middle class out to dry," said Holly Shulman, a spokeswoman for the Democratic National Committee.
But Bush on Wednesday faulted liberals for embracing a "new normal" that includes lower economic growth and worker take-home pay.
"In truth it is just the best the progressive liberals can do," he said. "And to state the obvious, the new normal is not good enough, and not even close."
He also drew distinctions with Trump, who was speaking at the exact same time at a tea party-sponsored rally on the Mall in Washington to denounce the Iranian nuclear deal.
Bush said that candidates like Trump "who call themselves Republicans, will tell you that to save U.S. jobs, we have to throw up a bunch of walls and tariffs and protect our businesses from competition. That’s a siren call of surrender, and I won’t go for it."
"The way we bring jobs back to America is to take power out of Washington, give it back to the American people by allowing them to have more of their hard-earned money," he said, adding later: “Senator Clinton and Mr. Trump may not believe we can do it, but I sure as heck do -- and I know you do as well."
A self-professed policy wonk, Bush has been working on details of his tax reform plan for months with a small team of advisers, many of whom have close ties to Wall Street and Capitol Hill. His policy chief, Justin Muzinich, is a former Manhattan investment banker, while Michael Steel, a communications and policy aide, served House Speaker John A. Boehner (R-Ohio) and on the 2012 vice presidential campaign of Rep. Paul Ryan (R-Wis.).
That's why it should be no surprise that Bush shares common goals with Ryan and other congressional Republicans, including his call to lower tax rates, reduce the number of tax brackets and eliminate the majority of tax deductions.
Bush has also adopted elements of Ryan's old media and outreach strategy. When the Wisconsin congressman chaired the House Budget Committee, he would unveil his spending proposals by publishing an op-ed in The Wall Street Journal. Bush did the same thing with his tax plan on Wednesday.
Ryan also would use television interviews to tout his ideas. Ditto Bush, who appeared on the Fox News Channel and CNBC on Wednesday morning, where he faced questions about Trump's sustained popularity.
"I’m running a policy oriented campaign," Bush told CNBC. "I’m not going to be the loudest vote out there and I’m not going to disparage and insult people. I’m going to come up with plans that give people hope that their lives can be better."
"If people are going to want someone who disparages everybody, and that’s their version of a sign of strength, then I’m not going to be elected president," he added. "But if they want someone that has the leadership skills to change the culture in Washington, which is broken, I’m a disrupter. That’s what I did when I was governor of Florida."
Bush, like Ryan and other presidential candidates, has also been careful to woo key conservative advocates for sweeping tax cuts. On Tuesday, he convened an hour-long meeting in Manhattan at the offices of New York Jets owner Woody Johnson and huddled with a trio of supply-side conservatives. Heritage Foundation economist Stephen Moore, publishing executive Steve Forbes and CNBC contributor Larry Kudlow met with Bush alongside Johnson, Bush’s national finance chairman, according to two Republicans familiar with the meeting.
Bush is the latest in a series of candidates to meet with Kudlow, Moore, Forbes and Republican economist Arthur Laffer, who are part of a group they call the Committee to Unleash Prosperity that is pushing candidates to reduce taxes on income and investment — particularly for the highest-earning Americans — to spur more economic growth.
But Bush is one of the last major GOP contenders to do so. Moore said Tuesday that he and the other organizers are trying to line up a separate dinner with Bush next month.
Jim Tankersley, Kelsey Snell and Jose A. Del Real contributed to this report.