Republican presidential candidate Tim Pawlenty’s economic plan includes an average $1.4 million savings for top 0.1% taxpayers. His plan shrinks rates on dividends, capital gains, interest, estates and income for a total of $11.6 trillion tax-cuts. It will also mean 63.6% of U.S. households will enjoy tax-cuts and nothing for the remainder. About 50% of the benefits will be experienced by those who would earn over $593,011 in 2013. Tax Policy Center’s Robertson Williams said Pawlenty’s plan is pro-wealthy, giving them big tax cuts, making the tax system much less progressive.
Pawlenty wants the individual tax rate reduced from 35% to 25% and 15% to 25% reduction for top corporate rate. He also proposes corporate rate for small businesses currently paying individual rates. His spokesman Alex Conant said the goal is to create jobs and grow the economy and to do that, taxes on entrepreneurs and small business owners needed to be reduced. Pawlenty’s plan rids of corporate tax breaks while keeping all individual tax breaks. Income tax bracket will be expanded by 10% to cover the first $50,000 individual income and the 1st 10,000 for married couples. Compared with Bush-era tax cuts, Pawlenty’s plan would mean $7.6 trillion government revenue in the next 10 years and foregone revenue of $11.6 trillion for the Treasury. The revenue loss estimated is at $2 trillion against the 5% yearly gain Pawlenty is after.
Pawlenty’s proposal is larger by about 3 times compared with the proposals of House Budget Chairman Paul Ryan and House and Means Chairman Dave Camp, both Republicans. Both favor federal revenue that will be equal to the result if Congress extended expiring cuts until further notice. They also favor 25% corporate and individual rates paired with tax break cuts. The analysis made may have some inaccuracies about Pawlenty’s plan purging the alternative minimum tax. Conant said AMT rates will be reduced and index the exemption. It reduces affected taxpayers. Pawlenty said a 5% yearly growth will narrow the revenue gap, growth that is propelled by his proposed tax plan, spending cuts, regulatory revamp and monetary policy changes.
Conant said critics look at just one segment of it in isolation, missing the point. He said the economy needs a comprehensive plan and that is what’s in Pawlenty’s offer. The U.S. economy has not grown 5% in a single year since 1984 and hitting it is not easy. Pawlenty said if that 5% goes lower, it’s big trouble. He said it isn’t about people getting wealthier or not but about the things needed to make it more likely; that businesses will, grow, add employees, buy capital equipment, build buildings, conduct research and do all the things it takes to keep a private economy going. Conant didn’t disclose Pawlenty’s advisers but said the policy team will be introduced soon.