What would a Jeb Bush presidency mean for taxes?(Read article summary)
Jeb Bush gave a speech this week that exposed some interesting internal conflicts in the former Florida governor’s campaign platform. On one hand, Bush called for government to help working class families. On the other, he demanded that government stay out of the way and let markets grow the economy.
Jeb Bush gave a fascinating and important speech yesterday to the Detroit Economic Club, a traditional venue for presidential candidates. In it, he laid out an economic and social vision that echoed in many ways the “compassionate conservatism” message that his brother used with great success in his first run for the White House.
But the talk exposed some interesting internal conflicts in the former Florida governor’s message. On one hand, it was a call for government to help working class families with a strong safety net “to cushion our occasional falls” and increase educational opportunities for all. On the other, it demanded that government stay out of the way and let markets grow the economy.
Bush had little explicit to say about taxes (this was not a wonky policy speech—I’m sure they’ll come later). Still, it was hard to read the speech without taking away some messages about where Bush will land on taxes, as well as broader fiscal policy.
For example, he began the speech with a long peroration about the sources of American greatness. His examples: oil and gas fields, hospitals, and R&D labs. It is hard to not notice that all those enterprises are heavily supported with tax subsidies. Bush argued, as economic conservatives often do, that government should not pick winners and losers. He said it this way:
“I’m not here to take sides. And I don’t think government should either. Because when government protects one business against another, or tilts the field of competition, there is a clear loser: …anyone who wants to innovate and shake things up…. And we know that in the end, standing against competition and dynamism is a losing battle.”
Yet picking winners and losers is exactly what the tax code does. This year alone, businesses will receive more than $120 billion in tax subsidies from the federal government. And just about all of them are explicitly intended to tilt the field of competition. That’s why Congress passed them.
On the day Bush spoke, the House Ways & Means Committee took its first vote of the new Congress on the ever-expiring tax extenders. And it voted to restore and make permanent seven of those subsidies—a step that would pick winners and losers and add about $93 billion to the nation’s debt over the next decade. Is there room for these tax breaks in Bush’s take-no-sides vision of government?
More broadly, it is hard to give a speech in Detroit that opposes government intervention in business. Not far from everyone’s mind: The now-thriving domestic auto industry would likely be dead today if not for aggressive government support in 2008 and 2009. Once again, government tilted the field of competition.
Bush struggled with a different set of inconsistencies when he spoke of families. His rhetorical focus was on “hard-working middle-class families.” And he eloquently described workers up at 5:00 AM to catch a bus to jobs in hotels, restaurants, and hospitals; construction workers pulling underground cable on the night-shift; or college grads driving for Uber to pay off student loans.
But what government policy did he single out for hurting these families? Obama’s now-discarded plan to limit tax benefits for Sec. 529 education savings accounts. The problem, as my Tax Policy Center colleague Kim Rueben has written here and here that A) nearly 90 percent of the assets in these accounts are held by households with incomes in excess of $100,000 (few of whom are likely working as housekeepers) and B) taken in their entirety, the Obama tax proposals would benefit, not hurt, children of parents who do work low-wage jobs.
Bush isn’t the first presidential hopeful to confront these issues. As his campaign moves forward, it will be interesting to see whether he attempts to finesse these inherent inconsistencies (as nearly all pols do) or whether he tries to address them head-on.
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