Election-year tax rhetoric has never been notable for its frankness. A promise to raise someone’s taxes does not seem particularly likely to win that person’s vote, and no one wants to follow in the footsteps of Walter Mondale, the last major-party nominee to propose a general tax increase.
But this year has been worse than any campaign I can remember.
The most amazing proposal came from Rick Santorum, who lost the Michigan and Arizona primaries to Mitt Romney this week but is ahead in the pollsin several states that will vote on Tuesday.
He would reduce almost everyone’s taxes. He would slash tax rates for all, his campaign Web site promises, while preserving “deductions for charitable giving, home mortgage interest, health care, retirement savings and children.”
He would cut capital gains and dividend tax rates to 12 percent, from 15 percent, and triple the personal deduction for each child. He would repeal the alternative minimum tax. He would cut the corporate tax rate in half, increase the research and development tax credit and set the rate at zero for manufacturers. He would eliminate the estate tax, or the “death tax” in his lexicon. He would eliminate “marriage tax penalties throughout the federal tax code.”
The Tax Policy Center in Washington estimated that in one year, 2015, that set of proposals would reduce federal tax revenue by 40 percent, or $1.3 trillion, from what it would be under current law, which assumes the expiration of the Bush tax cuts. But the center estimated that not everyone would pay lower taxes under that proposal. It estimated that 0.3 percent of taxpayers — most of them earning less than $30,000 — would face tax increases.
And who would be the losers?
Mostly single mothers, it appears.
That conclusion is based on a guess by the Tax Policy Center, which says the Santorum campaign declined to comment on it. The campaign did not get back to me either.
The “marriage penalty” that Mr. Santorum spoke of hurts two-income couples, which pay more than they would have paid if they were single and earning the same amount. That discourages marriage to some extent. (There is an offsetting marriage bonus, in which one-earner couples can save money by tying the knot, but politicians tend not to get worked up over it.)
One group of single people now gets an advantage over other singles. A taxpayer without a spouse, but with dependents, can file as a head of household and save on taxes. The Tax Policy Center concluded that to completely eliminate the marriage tax penalty, the tax code would have to eliminate the special rates for heads of household, since otherwise they would still be worse off if they married.
Heads of household can be men or women, of course. But most of them, said Roberton Williams, a senior fellow at the center, are single mothers.
The center’s analysis is based solely on Mr. Santorum’s public statements; his campaign declined to discuss the proposals with the group. But since the Tax Policy Center’s estimate was published in January, the Santorum campaign seems to have decided it needed to do something to assuage those who care about deficits.
Last week another group, the Committee for a Responsible Federal Budget, concluded that Mr. Santorum’s proposals would cost the government several hundred billion dollars less than the earlier estimate. The difference came from private assurances given by Santorum aides that he would eliminate other popular tax breaks.
“The Santorum campaign identified to C.R.F.B. which tax expenditures they would like to maintain, and they told us they would eliminate all remaining tax expenditures on the individual and corporate side,” Jeffrey Vanke, a senior policy analyst for the committee, told me.
If that is correct, Mr. Santorum wants to get rid of tax deductions for state and local property and income taxes. He would end the tax-exempt status of municipal bonds. He would tax the buildup of cash value in life insurance policies. He would tax soldiers on the value of benefits and allowances.
At least that is what Mr. Vanke says he was promised. As a result, Mr. Vanke estimates that Mr. Santorum ranks second among the candidates in the amount of tax revenue that he would cut, behind Newt Gingrich, who would among other things eliminate capital gains taxes entirely. The Santorum campaign did not respond to requests for comment. But I would be very surprised if the candidate confirms he wants to raise taxes on soldiers or tax interest on munis.
Mr. Santorum’s promises to slash taxes may have gotten under the skin of Mr. Romney, who last week escalated his tax-cut provisions. He called for reducing every tax bracket by 20 percent, so the top rate, now 35 percent, would fall to 28 percent, the same top rate that Mr. Santorum advocates.
Mr. Romney claims that a combination of additional economic growth and eliminating unspecified deductions would mean no revenue would be lost. Mr. Santorum seized on the fact that some of Mr. Romney’s cuts would be available only to those earning less than $200,000 a year by accusing him of “just more Obama-style class warfare.”
No matter how much talk there is about cutting spending — and the Republican candidates do a lot of it without getting very specific — the government needs to raise more revenue than it is getting now to finance needed operations while reducing deficits. A healthy economy would solve part of the problem, but not all of it.
To some deficit hawks, like Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, the campaign so far has been a disappointment. In tax policy circles, she said, there has been growing agreement that a reform similar to the 1986 Reagan tax reform is needed — cutting rates and eliminating loopholes and deductions. But while that reform was revenue-neutral, she said, this one would need to raise revenue.
“We get a lot of details on the fun stuff, and not so much on the hard stuff,” she said of the candidates’ tax proposals. “If we don’t have a real discussion of trade-offs and the kinds of difficult choices we will have to make to address the debt, then we won’t come out of the election with the kind of mandate we need to enact necessary reforms.”
Perhaps that is expecting too much of candidates, and it is worth noting that the details of the Reagan plan were disclosed after he won a second term by defeating Mr. Mondale in 1984, not before the election. But that bill was able to pass because legislators were able to work across the aisle and compromise. To say the least, Republicans have shown no desire to work with Democrats since Mr. Obama was elected, and it is hard to imagine that changing next year, no matter who wins the election.