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News Taxes Thursday, Oct 29 2015

Rubio Was Wrong: Anti-Middle Class Tax Plan In Light Of Day

Oct 29, 2015

Marco Rubio couldn’t hide the truth about his regressive tax plan at last night’s debate. Unfortunately for Rubio, multiple analyses of his tax plan show the wealthiest one percent save more under his plan than middle income earners. Rubio’s sleight of hand doesn’t stand up to scrutiny in the light of day — John Harwood was right: Rubio is bad for middle-class Americans.

The one true thing Rubio said last night was when he admitted the wealthier are better off under his plan, saying, “If someone makes more money, numerically it’s going to be higher.”

Take a look at some of the ultimate Democratic super PAC’s (a.k.a the media’s) coverage of Rubio’s misleading comments:

Rubio dodges a big question on his tax plan: This was in some ways the most important evasion of the night, because it’s an example of how deftly Rubio will defend and disguise his deeply conservative economic scheme should he become the nominee.

The sleight of hand is easy to miss. (One of the few to catch it was New York Magazine’s Jonathan Chait.) Rubio is correct when he says that, by the Tax Foundation’s reckoning, his plan would deliver proportionally higher after-tax benefits to the very poor than it would to the rich. But Harwood hadn’t asked about the poor. He’d asked about the middle class. Sure enough, the Tax Foundation found that the top 10 percent of earners in America would get proportionally larger benefits than all but the bottom one-third of the income scale, and that the top 1 percent — the wealthiest of the wealthy — would get more than everybody except the bottom tenth.

And that’s to say nothing of the fact that his plan is so expensive even many conservatives think it’s wildly unrealistic. If Rubio wins and a Republican-controlled Congress passes something that looks anything like his plan, the only way to offset the expense would be through deep spending cuts into programs upon which the poor and middle class rely.

A contentious exchange in Wednesday’s debate between CNBC moderator John Harwood and Senator Marco Rubio prompted outcries from conservatives accusing the journalist of “lies” when he cited a study saying the Floridian’s tax plan gives larger benefits to the richest Americans than to the middle class.

Harwood was correct. Rubio sidestepped and answered that people “at the lower end” enjoy the largest gain under his plan, and he was also correct in percentage terms.

The study in March by the conservative-leaning Tax Foundation shows the distribution. Rubio’s plan would lead to average after-tax income gains of 27.9 percent for the top 1 percent of earners, considerably more than for middle-income earners. It would also lead to an average gain of 55.9 percent for those in the bottom 10 percent of the income spectrum, under “dynamic scoring” assumptions, the study says.

The award for smartest and most deceptive dodge of the night goes to Marco Rubio. Harwood pointed out that, according to the Tax Foundation, Rubio’s plan would give “nearly twice as much gain in after-tax income to the top one percent as to people in the people in the middle of the income scale.” That is true, even under the most generous assumptions the conservative think tank makes: Under Rubio’s plan, the top one percent gains about 28 percent in after-tax income, including dynamic effects; the middle 40 to 50 percent sees just a 16 percent increase.

But outside of the very poorest Americans, Rubio’s plan would still benefit the one percent more than everyone else on the income spectrum. That’s largely because it eliminates capital gains, dividends, and estate taxes entirely, disproportionately benefit the very wealthiest. (The caveat here is there isn’t a good benchmark for the Tax Foundation’s analysis; less ideological experts like the Tax Policy Center say Rubio hasn’t given enough details to even properly analyze the plan’s impact.)

This description is completely true. The Tax Foundation, a right-wing group, analyzed Rubio’s plan and found that the richest one percent would get an 11.5 percent increase in their after-tax income, as opposed to a 1.7 percent increase in after-tax income for taxpayers in the middle of the income distribution. Because it is a right-wing group, the Tax Foundation also prepared a “dynamic” analysis assuming the most fervent dreams of supply-side economics would hold true. That analysis — the numbers from which Harwood used, perhaps as a concession to Rubio, found that the middle would get a 15 percent increase in after-tax income, and the top one percent a 27.9 percent increase.

Rubio denied it flat-out. (“No, that’s — you’re wrong.”) First he answered by stating that his plan would give a bigger percentage increase in after-tax income for earners at the bottom — a different comparison from the one made by Harwood, who focused on the middle. Then he tried to say that his plan merely gave higher total dollar amounts to the rich because they earn more. (“Yeah, but that — because the math is, if you — 5 percent of a million is a lot more than 5 percent of a thousand. So yeah, someone who makes more money, numerically, it’s gonna be higher.”) Rubio was arguing that his plan merely gives higher dollar amounts of tax cuts to the rich because they pay more to begin with. But that was not Harwood’s claim. Harwood said the Tax Foundation found Rubio gave a proportionally higher cut to the richest earners than the middle-income earners, which is factually true.

Published: Oct 29, 2015

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