Sun Sentinel Broward Edition

Ru­bio has new spin on tax plan

- By Lisa Mascaro Tri­bune Wash­ing­ton Bureau lmas­caro@tri­bune.com

Florida se­na­tor would give tax credit to fam­i­lies with chil­dren, an idea which gen­er­ated de­bate in GOP cir­cles.

WASH­ING­TON — Ever since 1981, when Ron­ald Rea­gan signed a tax-re­form law that reversed a half­cen­tury of climb­ing rates, the pur­suit of ever-lower in­come tax brack­ets has been the prime goal of Repub­li­can eco­nomic pol­icy.

Re­vis­ing that party or­tho­doxy has now be­come a main ex­hibit for Sen. Marco Ru­bio’s claim to be a “new gen­er­a­tion” Repub­li­can.

The 43-year-old se­na­tor from Florida, who de­clared “yes­ter­day is over” as he an­nounced his can­di­dacy last month, has pro­posed a tax plan that puts less em­pha­sis on low­er­ing the top tax rate and in­stead of­fers a large new credit for fam­i­lies with chil­dren, which he says will help work­ing house­holds.

The plan, the first sub­stan­tial tax pro­posal of the 2016 pres­i­den­tial cam­paign, al­ready has gen­er­ated de­bate within Repub­li­can pol­icy cir­cles. The party’s tax purists have not been en­tirely pleased. Some have hurled the ul­ti­mate in­sult for a Repub­li­can, com­par­ing Ru­bio’s $2,500 child tax credit, which more than dou­bles the cur­rent $1,000 al­lowance, to one pro­posed by Pres­i­dent Barack Obama. Oth­ers sim­ply called the tax plan “un­der­whelm­ing.”

GOP crit­ics say that the top rate in Ru­bio’s plan, 35 per­cent com­pared with the cur­rent 39.6 per­cent, is too high. In 2012, Mitt Rom­ney, the Repub­li­can pres­i­den­tial nom­i­nee, pro­posed low­er­ing the top rate to 28 per­cent. Some up­per-in­come tax­pay­ers with­out chil­dren could see a tax in­crease un­der the Ru­bio plan, crit­ics note.

Ru­bio in­sists his plan is cru­cial to re­viv­ing eco­nomic growth. Child-rear­ing con­trib­utes to so­ci­ety in the form of fu­ture tax­pay­ers who will fuel eco­nomic growth, “not to men­tion our fu­ture Amer­i­cans, our fu­ture lead­ers,” Ru­bio, a fa­ther of four, said at a con­ser­va­tive fo­rum last week.

For­mer Florida Gov. Jeb Bush took a swipe at Ru­bio’s plan in re­cent re­marks to the same con­ser­va­tive fo­rum, spon­sored by the Na­tional Re­view. His brother, for­mer Pres­i­dent Ge­orge W. Bush, boosted the child tax credit to its cur­rent level, but rather than in­crease it fur­ther, Jeb Bush said he would pre­fer to try to “lower the rates down as (far as) pos­si­ble.”

On the other side, Democrats say that Ru­bio’s plan would re­duce gov­ern­ment rev­enue by far too much. By try­ing to ex­pand the child credit while still re­duc­ing top rates and in­clud­ing other tax cuts that would di­rectly ben­e­fit wealthy tax­pay­ers, Ru­bio ended up with a plan that car­ries a price tag of $4 tril­lion over a decade, ac­cord­ing to an anal­y­sis by the Tax Foun­da­tion, a non­par­ti­san group based in Wash­ing­ton.

As GOP can­di­dates’ tax plans emerge, dis­cus­sion on the party’s right flank is fo­cused on Sen. Ted Cruz’s pur­suit of a flat tax and his prom­ise to abol­ish the In­ter­nal Rev­enue Ser­vice.

Cruz said at an event last week that he wants a tax code sim­ple enough that “ev­ery Amer­i­can can fill out their taxes on a post­card.”

But many party ac­tivists be­lieve they need to do some­thing to im­prove the GOP’s im­age as the party of the rich, a de­sire that has muted crit­i­cism of Ru­bio’s plan.

Repub­li­cans have done par­tic­u­larly badly with women vot­ers, among whom a tax cut for chil­dren could be popular, some strate­gists ar­gue.

“It’s very at­trac­tive po­lit­i­cally — and bul­let proof against lib­eral crit­i­cism that it’s just for rich peo­ple,” said Grover Norquist, pres­i­dent of Amer­i­cans for Tax Re­form, who had ini­tially been skep­ti­cal of Ru­bio’s plan.

The wealthy, how­ever, would still do well un­der Ru­bio’s pro­posal. He would elim­i­nate taxes on cap­i­tal gains, div­i­dends or in­vest­ments — types of in­come more of­ten re­ceived by the rich than those in the mid­dle or lower-end of the in­come spec­trum.

Un­der Ru­bio’s plan, in­di­vid­u­als could con­tinue to deduct mort­gage in­ter­est and char­i­ta­ble giv­ing, but other long-stand­ing tax cred­its could be elim­i­nated as a way to off­set some of the costs.

One group of tax­pay­ers could see their in­come taxes rise un­der Ru­bio’s pro­posal: higher-in­come work­ers with­out kids.

Be­cause Ru­bio’s plan sim­pli­fies the in­di­vid­ual code to just two brack­ets — 35 per­cent and 15 per­cent — cou­ples earn­ing more than $150,000 (or $75,000 for sin­gles) who were pre­vi­ously in a mid­dle bracket would likely be bumped to the higher 35 per­cent rate.

Ru­bio’s back­ers, how­ever, counter that even those fam­i­lies could ben­e­fit from other parts of the plan, such as the elim­i­na­tion of taxes on cap­i­tal gains, div­i­dend and in­ter­est in­come.

“The ques­tion is, when he ac­tu­ally fills in the de­tails of his pro­posal, how far down the road is he go­ing to go?” said Howard Gleckman, a se­nior fel­low at the non­par­ti­san Tax Pol­icy Cen­ter. “That’s a ques­tion we can’t re­ally an­swer yet.”

“It’s in­ter­est­ing,” Gleckman added, that Ru­bio is ar­gu­ing that “you ought to have a gov­ern­ment sub­sidy” for rais­ing chil­dren. “He’s try­ing to po­si­tion him­self as a dif­fer­ent kind of Repub­li­can.”

 ?? JAC­QUE­LYN MARTIN/AP ?? Rather than low­er­ing the top tax rate, the plan pro­posed by Repub­li­can pres­i­den­tial can­di­date Sen. Marco Ru­bio in­stead of­fers a large new credit for fam­i­lies with chil­dren.
JAC­QUE­LYN MARTIN/AP Rather than low­er­ing the top tax rate, the plan pro­posed by Repub­li­can pres­i­den­tial can­di­date Sen. Marco Ru­bio in­stead of­fers a large new credit for fam­i­lies with chil­dren.

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