Republican presidential candidate Jon Huntsman released his tax plan Monday afternoon in New Hampshire. Huntsman, it should be noted, has yet to sign the Taxpayer Protection Pledge, a written commitment to the American people that he will oppose and veto any and all efforts to raise taxes. While ATR encourages Huntsman to sign the pledge, here is a brief overview of his tax plan:
–The plan is revenue neutral, unlike the Simpson-Bowles tax hike plan which called for a massive net tax hike in order to increase Washington, DC spending. According to Paul Ryan the Simpson-Bowles plan was a $2 trillion net tax hike and according to the Heritage Foundation, a $3.3 trillion net tax hike.
–It lowers marginal tax rates to increase incentives to work, save, and invest capital. The top marginal tax rate on small businesses and families would fall from 35 to 23 percent. It also simplifies the rate structure, moving from six to three marginal tax brackets (8, 14, and 23 percent).
–When combined with the Medicare payroll tax, the Huntsman plan reduces the top rate on all business income (small business and corporate) from 35 to 25 percent, in line with the House GOP budget's call for tax reform. It's important that the tax code not punish or reward businesses for choosing whether to be a partnership, a Subchapter-S corporation, or a corporation.
–The plan eliminates all tax deductions and credits and plows all of the money into lower marginal tax rates. The plan chooses pro-growth lower marginal rates over industry-specific tax breaks without raising net taxes. With this pro-growth reform, the alternative minimum tax (AMT) is no longer needed and is eliminated accordingly.
–The plan eliminates the jobs-killing capital gains and dividends tax.
–It cuts the corporate income tax rate, currently the highest in the developed world. The plan would cut the rate from 35 to 25 percent. This would put the U.S. corporate rate closer to that of our European competitors. But in order to match the European average, the federal corporate rate would have to fall to 20 percent or lower (to account for state corporate income tax burdens).
–The plan ends the international double-taxation of corporate income. It kick-starts the reform with a "repatriation" year to bring back hundreds of billions of dollars in capital immediately. It then moves toward a territorial tax system, in line with our principal competitors' policies