This year, the tax plans offered by various Republican candidates were all over the map in terms of the proposals being made. And most tax plans failed to avoid certain pitfalls, such as finding ways to cut taxes without increasing the debt and ensuring that cuts weren’t disproportionately skewed toward benefiting the wealthy.
Hudson Institute Senior Fellow and Weekly Standard contributor Jeffrey Anderson has long offered compelling — and critical — analysis of Republican fiscal policy. Unhappy with the alternatives available, Anderson has now come up with his very own tax plan that deserves serious consideration from voters and candidates alike.
You can read the granular details of the ‘Main Street Tax Plan’ here, but Anderson broadly characterizes his plan as “pro-growth, pro-American worker, and pro-fiscal responsibility.” Those are all tricky interests to balance, and are often at odds with each other. But independent analysis confirms Anderson has found a balanced approach to cut taxes, save money, and benefit ordinary Americans.
As for the plan spurring growth, Anderson’s plan looks extremely promising:
As for benefitting workers, compared to proposals by Jeb Bush, Marco Rubio, and Ted Cruz — as well as a 20 percent flat tax — only the Main Street plan was scored by the Tax Foundation as benefitting average Americans more than the top one percent of income earners. Under the current tax code, the largest jump in tax rates hits the middle class squarely — the rate jumps from 15 to 25 percent at about $48,000 in income for single earners and around twice that for married couples. No other gap between tax brackets is so high, and this often discourages certain workers from working more. For example, blue collar workers have to be careful about racking up more overtime, lest they land in the new bracket and it costs them money.
Anderson smooths this out by introducing a 20 percent tax bracket for the first quarter of earners in the 25 percent tax bracket to help this transition to paying higher taxes. This would result in a significant tax break for millions in the middle class.
As for the plan being fiscally responsible, it would increase federal revenue over the next decade by $679 billion, whereas the aforementioned GOP plans would increase debt anywhere from $768 billion to $2.6 trillion.
Some other key details of the plan worth mentioning: the plan would make 33 percent the top rate, reduce the corporate tax rate to 25 percent, eliminate the Medicare payroll tax, and eliminate the marriage penalty. It would also stop means-testing the child tax credit and cut it in half to $500, while also introducing a new child tax deduction of $2,000.
Tax policy is inevitably about tradeoffs, and Anderson will surely face criticisms of particular aspects of his plan. But Anderson has spent plenty of time kicking the tires on other GOP tax proposals. He has learned a lot from the shortcomings of other plans, and it shows. His uniquely balanced approach to a complicated issue is both laudable and long overdue.
