Some news outlets lauded the plan as a moderate approach on tax issues that stands in contrast to the supply-side tax cut plans of previous GOP presidential candidates. The only explanation for such misguided praise is that the plan, while top-heavy, also includes some tax cuts for middle-income Americans.
Like many radical, rightwing tax plans before it, Sen. Rubio’s plan calls for elimination of taxes on capital gain and dividend income and movement toward a territorial corporate tax system. These two changes would lavish multinational corporations and the wealthiest Americans with trillions of dollars in additional tax breaks over the next decade.
In spite of these old hat ideological tax proposals, some commentators claim Sen. Rubio’s plan diverges from the supply-side plans of years past. Perhaps they are focused on the provision that would increase the child tax credit, taking it from a maximum of $1,000 to $2,500. In other words, Sen. Rubio’s plan attempts to make the massive tax cuts for the rich more palatable by also throwing a bone to low- and middle-income taxpayers.
The problem with this approach is that you can’t tax cut your way to economic growth and also pay for the nation’s basic priorities. Even with the tiny handful of revenue-raising offsets outlined in the plan, it would likely lose trillions of dollars in revenue over the next decade, ballooning the deficit to unsustainable levels or requiring draconian cuts in public investments.
Supporters of Sen. Rubio’s tax reform plan have attempted to use fantastical math to paper over gigantic revenue loss by arguing that the plan will cause such a surge in economic growth that it will more than pay for itself over the long term. Top-heavy tax cuts leading to economic growth is a familiar refrain that has been repeatedly disproven. The math of Sen. Rubio's allies is so fantastical however, that even conservative economist Laurence Kotlikoff said that it would “not pass muster as an undergraduate’s model at a top university.”
Sen. Rubio’s newest tax deform plan is a much larger version of his gimmicky tax proposals of years past. In each case, he attempts to get credit for touting tax cuts, while at the same time hiding the real cost of his proposals. The crucial difference this time around is the sheer scale of the damage his tax reform plan would do to tax fairness, public programs and the U.S. economy if it were ever enacted.