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Republicans Who Are Rising to the Challenge

Apr 8, 2015 | NOTICIAS

A new survey by the Pew Research Center finds that 72 percent of those polled say that, in general, the government’s policies since the recession have done little or nothing to help middle class people. This isn’t surprising, since median household income actually decreased after the official end of the recession in the summer of 2009. As many of us have argued before, the middle class is feeling anxious, insecure and uneasy — and they are right to feel that way.

This unhappiness provides Republicans with an opportunity — and two senators, Mike Lee and Marco Rubio, are stepping up at just the right time. Senators Lee and Rubio, the Tea Party’s great gifts to American politics, have put forward an outstanding tax plan. As my Ethics and Public Policy Center colleague Yuval Levin writes in summarizing the plan, it would:

  • Cut the business tax rate to 25 percent (including for all pass-through business income, so that large and small businesses pay the same rate);
  • End the taxation of capital gains, dividends, and interest;
  • Allow businesses to deduct capital investments from their taxable income immediately rather than over time;
  • Consolidate today’s seven tax brackets into two brackets at a 15 percent and 35 percent rate (although business income would be taxed at 25 percent and income from savings would not be taxed);
  • Repeal the Alternative Minimum Tax and most of the deductions in the code (leaving only the charitable deduction and a capped mortgage interest deduction that would both be available to all taxpayers, not just those who itemize); and
  • Replace today’s standard deduction with a $2,000 individual ($4,000 per married couple) credit, end the marriage penalty in the tax code, and provide a new $2,500 per child credit (alongside the existing $1,000 credit, which phases out with income).

There’s more to it than that, of course, and there are still important matters still to be determined, most especially the details of the cap on mortgage interest deductions (meaning the design and level of the cap). But the key thing to take away from this effort, I think, is that it would lesson the tax burden on working families and businesses, and in doing so provide help to the middle class and promote economic growth.

“Our hope here isn’t to pick winners and losers. Our hope here is to trigger economic growth,” Senator Rubio told reporters. He added that he believes “the vast majority of Americans” would see tax cuts if the plan was implemented.

This is a model approach for Republicans, whether they are running for president, the House or Senate, governor, or state legislator: To put forward ideas that are substantive and specific, bold, and address to the needs and challenges of our time. By which I mean they will actually and materially improve the conditions of ordinary Americans.

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