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GOP hopefuls’ tax plans

By Kay Bell · Bankrate.com
Tuesday, March 6, 2012
Posted: 3 pm ET

Voters in 10 states are headed to the polls on this Super Tuesday to help pick the Republican presidential nominee. Wins by Mitt Romney could speed along the GOP selection process, but don't expect the two biggest thorns in his side, Newt Gingrich and Rick Santorum, to go away even if they don't make up much ground today on the front-runner.

Social issues have gotten a lot of attention in the run-up to today's election, but most political observers believe that the general election battle will be over economic issues. And that, for the most part, means taxes.

President Barack Obama already laid out his financial campaign plank in his fiscal year 2013 budget, as well as in his plan to revamp the corporate tax code.

Here's a quick look at what his prospective opponents have to say. For space's and simplicity's sake, I'm only highlighting the GOP candidates' personal tax proposals.

It's no surprise that Santorum, father of seven, focuses on what he calls "a pro-growth, pro-family tax policy." He wants to trim ordinary income tax rates to just two: 10 percent and 28 percent. He also wants to triple the personal exemption for dependent children. Using 2011 tax figures as an example, families would be able to subtract $11,100 from income for each child instead of $3,700. This would reduce tax liability for a family in the 10 percent bracket by $740, says Santorum.

The former U.S. senator from Pennsylvania also says he wants eliminate the marriage tax penalty, but doesn't go into details. He's similarly vague on how he would cut federal spending by $5 trillion over five years.

Gingrich has proposed an optional individual 15 percent flat tax system. Because the flat tax calculation would be a choice, not a requirement, each taxpayer's details are critical in determining which tax method would benefit them more.

There's also the matter of whether Gingrich's plan would extend the Bush-era tax cuts set to expire at the end of 2012. The plan doesn't specifically say it would keep them, but Gingrich has voiced support for the continuing the cuts.

The former House speaker also would make capital gains, dividends and interest income tax-free; allow a standard personal exemption of $12,000 for each individual and dependent; and eliminate the standard deduction and most itemized deductions and credits, but keep deductions for mortgage interest and charitable contributions as well as the child and earned income tax credits.

Romney would permanently extend all of Bush's tax cuts and trim individual income tax rates by 20 percent. This would bring the top rate down from 35 percent to 28 percent and lower the bottom rate from 10 percent to 8 percent.

The former Massachusetts governor would repeal the alternative minimum tax, eliminate certain health care reform tax provisions and do away with taxes on long-term capital gains, dividends and interest income for married couples filing jointly with income less than $200,000 ($100,000 for single filers; $150,000 for heads of household). He also would repeal the federal estate tax, but keep the gift tax at a maximum 35 percent tax rate.

To make up for money that the U.S. Treasury would lose under his plan, Romney would expand the tax base by "cutting back tax preferences," that is, doing away with some tax breaks. It's no surprise that the only preferences he's specific about killing are those connected to the current Oval Office occupant.

Romney would let the tax provisions in Obama's stimulus act, first enacted in 2009 and subsequently extended through 2012, expire. These include the American opportunity tax credit for higher education, the expanded refundable portion of the child tax credit, and the expansion of the earned income tax credit.

OK, voters, you have synopses of the candidates' tax plans. Now get to the polls!

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3 Comments
Dmitry
March 09, 2012 at 5:21 pm

Gee, at least 2 out of 3 plan the system where the taxes are "for the little people" - that is working class. Those that live on capital gains, interest and dividends would pay no taxes therefore cementing the "upper class" inequality. Wow.
And majority of red states think that Obama(who by his track record is undercover republican) is the worst president ever.

Ray
March 07, 2012 at 10:01 am

Sounds like "smoke blowing" to me. Show me an equation where all of this balances out and maybe I'll believe in it.