Within hours of each other today, New Jersey Gov. Chris Christie and New York Mayor Bill de Blasio along with U.S. Sen. Elizabeth Warren will propose two very different tax plans.
Christie’s plan resembles the budget-busting tax giveaway to the rich that Mitt Romney campaigned on in 2012. Like Romney, Christie proposes drastically dropping the top personal income tax rate to 28 percent from the current 39.6 percent. Also, like Romney, Christie would cut the corporate tax rate from 35 percent to only 25 percent.
Details are scarce about Christie’s plan, but here’s what we do know:
Our analysis of Romney’s plan revealed his proposed cut in the top personal tax rate would slash income taxes on families making more than a million dollars a year by an average of more than $250,000 annually. That analysis assumed that Romney would eliminate all deductions and credits for top earners, something that Christie would not do. So Christie’s plan would provide even larger personal income tax cuts to the wealthiest Americans.
Dropping the top corporate tax rate to only 25 percent would cost the Treasury about $100 billion a year and $1 trillion over a decade, according to the Joint Committee on Taxation. Most of the benefits of such a tax cut would go to — you guessed it — the highest earners.
Perhaps Christie would try to offset part of the cost of his huge corporate tax cut by closing some corporate loopholes. But probably not. The only other corporate tax changes he mentions would add still more to the deficit.
The bottom line is that Christie’s tax plan would almost certainly entail both a huge increase in the national debt and a huge increase in inequality. Yet he brazenly claims that President Obama “has worsened income inequality through his policies,” and claims his plan would narrow the income gap.
Sen. Warren and de Blasio would go in an entirely different direction, what one might call the “anti-Romney.”
Their broad proposal includes multiple tax reforms to make the tax system more progressive. They call for higher taxes on wealthy investors’ capital gains and dividends, along with a “Buffett Rule” that would make top earners pay at least 30 percent of their reported income in federal income taxes, no matter how many loopholes they enjoy.
On the corporate tax side, they would reduce the incentives that encourage multinational companies to move jobs and profits offshore by taxing companies on their worldwide income (with a credit for any foreign taxes paid). They would also apply the current million-dollar limit on what corporations can deduct for their top executives’ pay to executive pay in the form of stock options.
At the other end of the income scale, their plan would expand the earned-income tax credit for low- and moderate-income working families.
These progressive tax proposals, mostly taken from ideas put forward by President Obama, would reduce income inequality significantly. That’s quite the opposite of Chris Christie’s recycling of Mitt Romney’s tax-breaks-for-the-rich proposals.