John Kasich: Tell us your tax ideas(Read article summary)
At least when it comes to taxes, GOP rivals Ted Cruz and Donald Trump have far more ideas than Kasich. In the contest over specifics, the Ohio governor and former House Budget Committee chairman, is a distant third.
Yesterday, GOP presidential hopeful John Kasich told The Washington Post editorial board that he should be elected because he is the candidate of ideas. “See, I am a fundamental believer in ideas. If you don’t have ideas, you got nothing. ”
At least when it comes to taxes, GOP rivals Ted Cruz and Donald Trump have got far more than Kasich. In the contest over specifics, the Ohio governor and former House Budget Committee chairman, is a distant third. And what we do know about his plan suggests that it too would add trillions of dollars to the national debt, despite his claims to being a fiscal conservative.
At the Post session, columnist Catherine Rampell complained that it was impossible to measure the budgetary effects of his tax proposals because he’s disclosed so few specifics.
Kasich countered that he’d put out sufficient detail:
“[The individual income tax rates are] 28, 25, 10 with an earned income tax credit and fewer deductions. Deductions for state and local taxes and charity. That’s what the plan is. Okay? It’s not – I mean, what more do you need? I can tell you what the rates are. I mean, what’s so difficult about this? That’s the outline of it. What else do we need?”
I’m so glad you asked, governor. Besides tax rates, voters also need to know what income would be taxed (the base) and the income levels at which the different rates take effect. If the tax base is close to current taxable income, it’s a sure bet that Governor Kasich’s plan would lose trillions of dollars, since he’d cut the current top rate from 39.6 percent to 28 percent.
Yet Kasich’s two-page description of his plan leaves a lot unspecified. It says he’d keep the mortgage interest and charitable deductions. In his meeting with the Post, he added the state and local tax deduction to his list of untouchables. He says he’d otherwise “simplify” the Tax Code. But what does that mean when he’d preserve three of the biggest deductions?
He’s been silent on other big individual tax preferences such as the exclusions for contributions to health insurance and retirement accounts. He’d cut the top long-term capital gains tax rate from 20 percent to 15 percent. But what about dividends?
What about the Alternative Minimum Tax or the income tax surtaxes that partially finance the Affordable Care Act. What about other complexities in the tax code like the limitation on itemized deductions and the personal exemption phaseout? Would he increase the standard deduction as Cruz and Trump would?
After determining the tax base and rates, we also need to know what credits he would allow. Like Cruz, Kasich would increase the Earned Income Tax Credit (albeit by half as much). What, if anything, would he do with other tax credits for children, child care, adoption, energy conservation, and so on?
Given what we know so far, there’s no reason to think that Kasich’s plan is any more fiscally responsible than his opponents’ (notwithstanding his frequent chiding of them on this score).
For instance, not only would he cut rates on ordinary income and capital gains and preserve big tax deductions, he’d also repeal the estate tax. On the business side, he’d cut rates, allow businesses to immediately deduct the costs of new investment, double the credit for research and experimentation, and exempt new foreign profits of multinationals from U.S. tax. It’s worthwhile discussing the advantages and disadvantages of these proposals, but they’d all reduce tax revenues.
In a campaign filled with name-calling, Kasich has laudably avoided personal attacks. Great! Now he says he wants to be the candidate of ideas. He should start with a detailed tax plan.
This article first appeared in TaxVox.