Tax Analysts Blog

Tax Cuts Are Tax Cuts Even When You Call Them Tax Reform

Posted on May 14, 2015

Is a tax cut still a tax cut if you call it “tax reform”? For my money, the answer is yes. But Howard Gleckman at the Tax Policy Center feels differently. Republican presidential candidates are going soft on big government, he contends. Or at least soft on big revenue. While most of the party’s White House hopefuls have advanced plans for tax reform, none have emphasized overall cuts in the tax burden.

“So far,” Gleckman writes, “among Republican presidential candidates and wannabes, tax cuts are going the way of American Idol.”

Gleckman has a point, I think: There is less talk about tax cuts during these early days of the GOP race. But there are plenty of cuts baked into the reform plans advanced by GOP candidates. It’s hard to attach meaningful revenue estimates to these tissue-thin, aspirational outlines, but several of the most prominent – including Ben Carson’s 10 percent flat tax and Marco Rubio's everything-but-the-kitchen-sink-plus-big-child-credits goody bag—promise to cut revenue collection by many trillions of dollars.

These “tax reforms” are clearly tax cuts, regardless of what the candidates choose to call them. We don’t hear much about starving the beast these days, but government will be on short rations under any of these plans.

Gleckman puts a lot of faith in what the candidates say about their reforms. In describing Carson’s plan, for instance, Gleckman acknowledges that “there is no doubt that his flat tax would result in a massive tax cut.” But Carson, he points out, “is not promoting it that way.”

Likewise, Rubio has advanced his reform plan without much talk about its revenue effects (huge by almost any standard). “While the plan as described would very likely add trillions of dollars to the deficit, that does not seem to be Rubio’s and Lee’s intent,” Gleckman says. “It would cut tax rates, but it is not aimed at cutting overall taxes.”

I can’t speak to intentions and aims, but I can say something about effects. And it’s hard for me to imagine that the tax cutting effects of the Lee-Rubio plan (or the Carson plan, or the Rand Paul plan, or the Ted Cruz plan) have been lost on any of the authors.

The Lee-Rubio plan, moreover, has been getting more generous over time, expanding beyond its marquee focus on expanded child credits to feature almost every item from the GOP wish list of desirable tax reforms, including the complete abolition of individual-level taxes on interest, dividends, and capital gains. Once merely sanguine in its fiscal assumptions, it’s now moving smartly toward reckless abandon.

Still, Gleckman is spot-on when he detects a change in GOP tax priorities, or at least GOP tax rhetoric. And he’s right that the change is “interesting to note.” But whether that change proves meaningful remains to be seen. Sometimes a semantic shift is important.

And sometimes it’s just a smokescreen.

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