Santorum's economic plan

In the Wall Street Journal today, former Senator and current Republican presidential hopeful Rick Santorum lays out his economic and tax framework.

He begins with an aggressive attack on Mitt Romney:

Attempting to distract from his record of tax and fee increases as governor of Massachusetts, poor job creation, and aggressive pursuit of earmarks, he now says he wants to follow my lead and lower individual as well as corporate marginal tax rates.

It's a good start. But it doesn't go nearly far enough. He says his proposed tax cuts would be revenue neutral and, borrowing the language of Occupy Wall Street, promises the top 1% will pay for the cuts. No pro-growth tax policy there, just more Obama-style class warfare.

By contrast, in my first 100 days as president, I'll submit to Congress and work to pass a comprehensive pro-growth and pro-family Economic Freedom Agenda.

Santorum then highlights 10 areas of tax and economic policy:

  1. Increase energy production
  2. Reduce regulation, especially at EPA
  3. New tax rate structure, with only two rates (10%, 28%), along with tripling child deduction and eliminating marriage penalty
  4. Cut corporate tax rate in half, to 17.5%, and eliminate tax on repatriated income
  5. Cut spending $5 trillion over five years
  6. Repeal Obamacare (mentioned along with the requisite attack on Romneycare.)
  7. Balance budget in 4 years and support Balanced Budget Amendment
  8. Support free trade agreements
  9. Reform, reduce, and block grant entitlement programs
  10. Housing: Phase out Fannie Mae and Freddie Mac, and allow tax deduction for capital loss on homes

It's a strong plan, commendable for its relative simplicity, with little to disagree with.

One small criticism, which plays into the overall perception of many (including me) that there may be an uncomfortably large degree of influence of Santorum's social views on his policy positions, relates to his suggestion of tripling the child tax deduction.

There are two separate aspects of the tax code which deal with children. One is a per-child tax credit of $1,000. This may be what most people think of when they hear the proposal, but it is not what Mr. Santorum is suggesting increasing.

Instead, as he clarified in a letter to the WSJ last week, Mr. Santorum said that his intent is to triple the personal exemption: "Families would be able to subtract $11,100 from income for each child instead of $3,700, an extra $7,400. For a family in the 10% bracket, this would reduce the tax liability by $740. For a family with no tax liability, there would be no effect."

I do appreciate that Santorum suggests a change which does not increase payments through the tax system for those who pay no income tax, and which is not modeled in implicit class warfare terms.

But Santorum's plan would probably add something on the order of $100 billion to the deficit, with its ultimate impact -- whether there are offsetting spending cuts or reduced other tax cuts  -- being a transfer of money from those who don't have children to those who do, or from those with a few children to those with many children.

If people can't afford to raise children, they shouldn't have children. Furthermore, while I absolutely support tax policy which is applied equally across all levels of income, the biggest beneficiaries of Santorum's policy suggestion are those in the highest income bracket, who can afford to raise their own children without taking money from a single person still trying to build up a nest egg to eventually afford having children of her own.

Santorum's tax plan has much to be admired, and I don't want to overstate the importance of one negative within a 10-point plan. Still, his obvious willingness and desire to change our culture through the tax code is different only in detail (rather than in fundamental understanding of the proper role of government) from anything Barack Obama might do to "spread the wealth around."

Santorum's tax plan would be a vast improvement over what we're living through now, and is arguably stronger than Mitt Romney's (though Romney's "revamped" plan is good enough.) I just wish it didn't reinforce my fear -- shared by many, and certainly to be made a huge issue by Team Obama should Rick Santorum win the GOP nomination -- that Santorum would be overly influenced by his social and religious views when it comes to governing.

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