Sen. Marco Rubio (R-Fla.) unveiled his tax reform plan Wednesday, arguing that Congress doesn’t have to choose between helping families and giving the economy a boost.
The pitch to the middle class and effort to boost his policy chops comes ahead of a possible 2016 White House bid for the first-term senator.
{mosads}Rubio, who crafted his tax plan with Sen. Mike Lee (R-Utah), said that their proposal to revamp the individual tax system would give an assist to families, while business reforms would help grow the economy.
“We rejected a false choice, that only one goal of reform could be pursued at one time,” added Lee.
Their plan is another example of top Republicans seeking to reach out more to the middle-class following Mitt Romney’s failed 2012 campaign and his comments about the 47 percent of Americans who didn’t pay income taxes.
Rubio and Lee’s proposal would collapse the current seven individual tax rates into 15 percent and 35 percent brackets, create a new child credit and end the marriage penalty. It would also allow businesses to immediately deduct investments, set the top rate for both corporations and small businesses at 25 percent and allow companies to immediately write off the full cost of investments.
The two senators were more vague about what tax incentives would be scrapped to help pay for the rate reductions and other tax cuts in their plan. Rubio and Lee would also no longer tax capital gains or dividends on stock on the individual side, and shield offshore corporate income from U.S. taxation.
Rubio all but acknowledged that the plan would add to the deficit, even as he and Lee said that any examination of their plan should be “dynamically” scored to take into account the changes that could spur economic growth.
“I’ve never believed that tax reform by itself should pay for itself,” Rubio said. “That basically argues that the money belongs to the government.”
Instead, Rubio said that the tax reform plan would be part of a broader fiscal approach that included revamping entitlement programs like Medicare and Social Security to help get long-term deficits under control.
The duo’s joint effort on the proposal came somewhat as a surprise, since Lee is close with Sen. Ted Cruz (R-Texas), another Tea Party favorite who could also join the growing GOP presidential field.
Rubio at first joked “I hope so” when Lee was asked Wednesday whether the tax reform plan meant that the Utah Republican would be in his corner for a 2016 campaign. But Rubio then brushed aside the question, reiterating he hadn’t yet decided whether to seek the White House or a second term in the Senate next year.
“I don’t think it’s fair to ask someone who they’re going to support for something they’re not running for yet,” Rubio said.
The plan won quick praise from free-market groups like the Tax Foundation and Grover Norquist’s Americans for Tax Reform, who both said the proposal would undoubtedly give the economy a jolt.
Top Democrats like Democratic National Committee Chairwoman Debbie Wasserman Schultz, the congresswoman who might for Rubio’s Senate seat in Florida if he runs for president, slammed the proposal almost immediately. Business groups who would see prized tax incentives on the chopping block under the plan also expressed concern. Those groups included the BUILD Coalition, which is seeking to preserve the ability for businesses to deduct the interest paid on debt.
“At every opportunity, Marco Rubio jumps at the chance to pander to the extreme base of the Republican Party,” Wasserman Schultz said in a statement accusing Rubio of both handing a huge tax cut to the wealthy and adding to the federal debt.
“Rubio might not have any interest in serving Florida in the Senate, but it’s clear he has a major interest in giving handouts to his donors and pushing a plan that is skewed towards millionaires and billionaires,” said Democratic Senatorial Campaign Committee spokeswoman Sadie Weiner.
Rubio and Lee said they would introduce their plan to Senate Finance Chairman Orrin Hatch (R-Utah), who is currently seeking to build momentum for an overhaul of the tax code.
But the two senators’ plan also underscores the challenges of tax reform. Lee released a tax plan during the last Congress that made similar changes to the individual system, and which the Urban-Brookings Tax Policy Center said would add $2.4 trillion to the deficit over a decade.
The Tax Foundation, which is a strong supporter of immediate expensing for businesses, said that the plan would amount to a $414 billion tax cut over a decade when viewed under traditional scoring rules. But under a dynamic score that tried to account for economic growth, the group said the plan would raise about $94 billion over 10 years.
Besides the interest deduction, Will McBride of the Tax Foundation said the plan would also roll back business tax breaks like the research credit.
On the individual side, Rubio and Lee said they would eliminate all tax deductions besides those for mortgage interest and charitable contributions. Their plan also sets the 15 percent tax rate on family income up to $150,000 a year, with income above that threshold being taxed at 35 percent. The current top individual tax rate is almost 40 percent.
The two senators are introducing their tax reform plan after a four-year stretch in which lawmakers on both sides of the aisle have struggled to gain traction on tax reform.
Former House Ways and Means Chairman Dave Camp (R-Mich.) released a plan last year that failed to excite either Republicans or Democrats. Unlike Rubio and Lee, Camp made it a priority to ensure the plan did not add to the deficit, or shift any of the tax burden away from the wealthy.
In 2012, Romney also faced questions about whether his tax plan would add to the deficit, as well as skepticism from conservatives who felt the GOP nominee didn’t move to cut taxes aggressively enough.
But Rubio said that candidates had to put out detailed plans when running for office, and insisted that his tax proposal would be a key part of his platform no matter what office he seeks next.
“You think I’m going to come up with a second tax plan?” he quipped.