Two headlines for potential 2016er Marco Rubio today, one good and one not so much. “Insider Buzz Grows for Marco Rubio” by NR’s own Eliana Johnson offers this killer quote from one GOP operative: “The Jeb boom is over and people are having second thoughts about Walker.” About that, I will only say that my own chats with donor-class types who’ve seen Rubio up close suggest he is making a strong impression as a high-energy guy who comes across as foreful and persuasive, especially on foreign policy. I think it is more about being pro-Rubio than anti-Bush or anti-Walker.
Then you have this in the New York Times today: “Marco Rubio’s Puppies-and-Rainbows Tax Plan,” Reporter Josh Barro hammers the proposal put forward by Rubio and Mike Lee for increasing the budget deficit. Recall that Lee-Rubio would among other things lower the top income tax rate to 35 percent, greatly expand the child tax credit, eliminate investment taxes, and lower the corporate tax rate. In his Bloomberg column, Ramesh Ponnuru called it “the most pro-growth tax reform since Calvin Coolidge’s presidency.”
I love the basic structure of Lee-Rubio, and clearly said so in my The Week column. Make the tax code more pro-investment for the longer term while also providing immediate tax relief to the broad middle. It is the Reagan formula updated for the 21st century. But like Barro, I don’t like all the red ink. And Barro quotes me thusly in the piece:
“It’s sort of the Oprah Winfrey theory of tax cuts,” says James Pethokoukis, an economic policy scholar at the right-of-center American Enterprise Institute. “She was like ‘You get a car, you get a car.’ Well this is ‘You get a tax cut, you get a tax cut.’ ”
As an aspirational marker, Lee-Rubio is a reasonable proposal. And it doesn’t have to balance on a static-scoring basis. But if Lee and Rubio choose not to (pretty much) pay for the tax cuts or are fuzzy about the “pay fors,” Democrats will surely fill in the gaps themselves. (This is something all potential 2016ers should keep in mind. They need to show their math.)
And while it’s sound economics to move from an income tax code to a consumption tax code — which Lee-Rubio partly does — a plan where it looks like many super-rich will potentially pay no taxes on their investment gains seems a political bridge too far. Perhaps a better path would be to more dramatically lower the corporate tax burden while increasing taxation on shareholders and coupling it with executive pay reform. It’s also important that Republicans not demand too much of the tax code. Regulatory reform, looser intellectual property law, ending Too Big To Fail, and better educating our kids deserve as much attention as taxes when it comes to modern “supply-side” reforms.