Jeb's Pro-Growth Tax Reform
Good on the numbers, but lacking in winning hearts and minds.
The Republican presidential field has a challenge: Correcting Barack Obama’s pitiful economic recovery. More than six years after Obama’s “stimulus” was supposed to save us, the recovery rolls on with historic levels of multi-generational dependency fed by anti-business, anti-job and anti-growth policies. Much of this is due to the Left’s move to nationalize vast swaths of the economy and redistribute wealth under the guise of “caring.” Now there comes a serious proposal with the aim of restoring 4% economic growth — a rising tide lifting all boats.
Former Florida governor Jeb Bush chose to ignore Donald Trump and his all-consuming echo chamber this week to announce an impressive proposal to reform taxes. Not quite as much fun as Trump’s huff, bluster and insults, we know.
Bush’s plan is classic pro-growth and is, therefore, evoking predictable cries of unfairness from the Left.
Here’s the plan in a broad strokes:
- Reduce the top income tax rate to 28% from 39.6%, while middle income earners (families making up to $89,000) would see their rate drop to 10%, with even lower thresholds for singles.
- Dividend taxes, capital gains and the world’s highest corporate of 35% all will be cut to 20%.
- Elimination of the estate tax, a.k.a. “death tax,” a socialistic vehicle for income redistribution that serves as the federal government’s last stab at one’s personal wealth.
- Short-term new investment would be 100% deductible.
- A “territorial” tax system that assesses the income in the country where it’s earned, plus a one-time 8.75% tax to repatriate American cash currently sitting in foreign banks.
- A deduction cap at 2% of one’s adjusted gross income would allow Warren Buffett, et al, who applaud higher taxes on the rich but just never seem to do their share to actually pay a bit more.
The Washington Post dusted off the progressive talking points, lamenting that the total Bush package would “cost” the government $3.4 trillion over the next 10 years. Translation: $3.4 trillion more would be left in the hands of consumers in the U.S. economy rather than being spent by federal government bureaucrats. We know leftists prefer to think of all money as inherently belonging to the government, but you earned it, not Washington politicos.
These leftists also prefer scoring the federal budget statically rather than dynamically, which is to say they don’t account for economic growth stimulated by tax policy. To them, a dollar in tax cuts is a dollar less revenue. They don’t count higher revenue generated by more income.
On policy points, the Bush plan scores high marks, especially in contrast to current failed policy and the Obama third term laid out in the Democrats’ primary.
As for the politics, Bush and any others who propose significant tax reform and economic growth policies should remember that policies, tax codes and businesses do not cast votes. It’s easy to demagogue a tax plan when top earners benefit most — such criticisms doomed Mitt Romney’s plan and candidacy in 2012. Most income taxes are paid by those at the top, but most voters are in the middle. And middle-income voters pay the lion’s share of payroll taxes, which are left untouched in Bush’s plan.
Republicans must take these proposals and translate them into the “what it means to you and your family” on the campaign trail in order to win hearts and minds.