Yesterday, Dave did a post comparing the proposed tax plans of Newt Gingrich and Mitt Romney.
Fairness requires that FOTM also present Rick Santorum’s tax plan. Santorum is not an after thought but is a viable conservative alternative to Romney.
This is the gist of Santorum’s tax plan which I distilled from a CNN Money article, Jan. 18, 2012. The article itself is based on an analysis conducted by the think tank Tax Policy Center:
- At the basis of Santorum’s tax plan is the premise that the Bush tax cuts are extended.
- Reduce the number of income tax brackets from 6 to 2 (10% and 28%).
- Retain many of the largest and most popular deductions, such as those for health insurance, retirement savings, charitable giving and mortgage interest.
- To strengthen the American family, Santorum proposes:
- Triple the personal deduction that parents can claim for their children.
- Eliminate the marriage penalty that often causes two-earner couples to owe more in federal income taxes than if they filed as single individuals.
- To encourage economic growth and development:
- Abolish the estate tax and the Alternative Minimum Tax, an income tax imposed on individuals, corporations, estates, and trusts.
- Reduce the capital gains rate from 15% to 12%.
- Reduce corporate income tax rate in half to 17.5%.
- Eliminate all corporate income tax for manufacturers.
- Increase the research and development credit.
- Reduce the tax burden on U.S. companies that choose to bring back their overseas profits to the United States.
The net effects of Santorum’s tax plan:
- 69% of Americans would get a tax cut, averaging nearly $7,800.
- The richer you are, the more you save under Santorum’s plan: Taxpayers in the lowest 20% of earners would get a tax rate reduction of 0.3%; those in the top 20% of earners would get a tax reduction of almost 10%; those in the top 1% would get an average rate reduction of 13.6%.
- There’ll be less revenue for the federal government — $900 billion less in 2015 — which will make it more difficult for lawmakers to reduce the deficit. Of course, the analysis by the Tax Policy Center does not take into consideration the increases in tax revenue if the American economy dramatically improves and becomes more productive.