If nothing else, the 2012 Republican presidential contest has forced GOP White House hopefuls to run a gauntlet of ever more draconian pledges demanded by party purists. At the top of the list is the Grover Norquist's Taxpayer Protection Pledge, which demands candidates "solemnly bind themselves to oppose any and all tax increases."
But at a time of record high income inequality, historically low federal taxes and rising national debt their party is largely responsible for producing, the GOP presidential wannabes must take a two-part vow about their own tax-cutting proposals:
(a) If my tax cut plan is enacted, my family and I will save ________ in federal taxes every year.
((b) If my tax cut plan is enacted, it will add ________ trillion dollars to the national debt of the United States over the next decade.
Call it the "MyTaxCut Pledge."
The need for the MyTaxCut Pledge became glaringly apparent after the 2008 presidential campaign. Republican nominee John McCain offered a Treasury-draining tax cut plan that would have produced a massive windfall for him and his heiress wife, Cindy. As the Center for American Progress explained at the time:
McCain favors making the Bush tax laws permanent, and also plans to repeal the Alternative Minimum Tax, double the dependent exemption and offer tax breaks on business income...Had McCain's tax proposal been in place in 2006, [they] would have done incredibly well - saving even more than they did under the existing Bush plan. John and Cindy McCain would have walked away with $373,429 in their pocket.
McCain's tax plan was radically more regressive than even that of President Bush - it would have delivered 58% of its benefits to the wealthiest 1% of American taxpayers. But John and Cindy's winnings wouldn't have ended there. As both the financial crisis and his slump in the polls deepened, John McCain proposed slashing capital gains taxes (a halving from 15% to 7.5%). Again, the gains from his scheme go overwhelmingly to the richest Americans (almost 60% of its benefits to families earning over $1 million a year), including his wife:
The McCains made $746,395 in capitals gains last year. A new analysis by Michael Ettlinger, Vice President for Economic Policy at the Center for American Progress Action Fund, reveals that McCain's capital gains cut would have reduced the McCains' taxes by $55,980 in 2007.
But the McCain's proposed personal payday pales in comparison to the vault-stuffing espoused by his surrogate Meg Whitman. During her failed 2010 run for governor of California, the billionaire former eBay CEO proposed killing the state's capital gains tax altogether. As the Los Angeles Times' Michael Hiltzik noted, ending the capital gains tax would cost California up to $10 billion in revenue annually even as it would put tens of millions of dollars directly into Meg Whitman's pocketbook.
The Whitman campaign refused to tell me this week what percentage of Whitman's income derives from capital gains (which can be defined as profits on stock, bond, real estate and other such investments). Whitman has thus far refused to make public her tax returns, which might hold a clue...Capital gains might even represent the majority of her income in some years.
As Chris Kelly of the Huffington Post aptly put it, "Meg Whitman's Tax Plan: She Stops Paying Hers."
That recent history suggests that the 2012 GOP presidential field should come clean about what their respective tax plans will do for their own personal finances. After all, by any standard most are wealthy, with Mitt Romney, Jon Huntsman and Herman Cain especially so. (Romney's fortune has been estimated as high as $250 million dollars.)
Alas, the odds of any of the Republicans taking the MyTaxCut Pledge are virtually zero. After all, as Politico reported earlier this year:
A POLITICO survey of the major GOP hopefuls found that none are promising to making their tax returns public, as then-candidate Obama did in 2007 and 2008 -- as well as during his Senate campaign in 2004 and later in 2006.
But if the would-be Republican presidents won't fess up about the personal bonanzas their tax policies are certain to produce, at least they could come clean about what they'll do to the national debt.
For example, the Paul Ryan budget plan supported by 235 House Republicans and 40 GOP Senators includes $4.2 trillion in tax cuts over the next 10 years. That's the major reason why the Ryan plan would add $6 trillion to the national debt over the next decade, which would ironically force Republicans to repeatedly raise the debt ceiling. The top tax rate would be lowered to 25% (from 35%), as would corporate taxes. As is almost always the case with GOP tax cut proposals, while the tax loopholes to be closed are left unmentioned even as the tax burden is dramatically shifted to lower and middle income Americans. (It should come as no surprise that Grover Norquist is now pressing Republican office seekers to sign a new pledge: enact the Ryan budget.)
If Republican candidates refuse to be honest about the oceans of red ink their tax-planning plans will produce, here are some helpful reminders for the electorate. The "Tax Relief Certainty Act" co-sponsored by Senator Jim Demint (R-SC) and Rep. Mike Pence (R-IN) would make permanent the Bush tax cuts current set to expire on January 1, 2013. Those tax cuts aren't merely the biggest driver of debt over the past decade and the next. As the New York Times explained today, the price tag is a staggering one:
Letting all of the cuts expire at the end of 2012 would save $3.8 trillion over the next decade. Letting the tax cuts expire for those making more than $250,000 would save $700 billion. That would make a real dent in the $2.4 trillion in total deficit reduction envisioned in the debt limit deal.
But when it comes to emptying the U.S. Treasury in order to pad the bank accounts of the richest Americans, self-proclaimed "Sam's Club Republican" Tim Pawlenty takes the cake.
That became abundantly clear in June when Pawlenty unveiled his economic plan diverting $11.6 trillion from the U.S. Treasury in order to give millionaires a 41% tax cut. His "Better Plan" would create two tax brackets of ten percent for those earning up to $50,000 and 25 percent above. (As with the Paul Ryan plan, the loopholes Tim Pawlenty would close remain unnamed.) In addition, the man who calls himself "T-Paw" insists, "we should eliminate altogether the capital gains tax, interest income tax, dividends tax, and the death tax." (It is worth noting that less than one-quarter of one percent of U.S. families pay the estate tax, while George W. Bush's last round of capital gains and dividend tax cuts in 2003 delivered 70 percent of their savings to "top 2 percent of taxpayers, those making more than $200,000.")
Pawlenty's claim to that he could achieve to five percent economic growth over ten straight years - a feat never performed in modern American history - was rightly mocked across the political spectrum as "fantasy", "magical", "wishful thinking" and "fuzzy math." But the most jaw-dropping aspect of Tim Pawlenty's economic hallucination is the unprecedented upward income redistribution it would produce. As Citizens for Tax Justice concluded, the 400 richest Americans - whose incomes doubled and tax rates were halved over the past decade - would enjoy a 73 percent reduction in their tax bills. As it turns out, the merely well-off and the fabulously rich would join the unimaginably wealthy in reaping the T-Paw Payday for the gilded class:
Taxpayers with incomes in excess of $1 million would enjoy an average cut in personal income taxes of $288,822, a 41.4 percent cut.
Taxpayers with incomes in excess of $10 million would enjoy an average cut in personal income taxes of $2.4 million, a 46.3 percent cut.
The cost of the personal income tax cuts just for taxpayers with incomes in excess of $1 million would be $141.8 billion.
If this all sounds familiar, it should. In 2008, John McCain briefly promised to balance the budget by 2013 even as his tax plan would have added $2 trillion more to the national debt. Acknowledging the fiscal reality, his chief economic adviser Douglas Holtz-Eakin walked back McCain's comically impossible promise:
"I would like the next president not to talk about deficit reduction."
At the end of the day, for Republicans there are only two certainties in life: debt and tax cuts. Which is why every Republican 2012 presidential candidate must take the MyTaxCut Pledge. Americans now struggling to make ends meet have the right to know how much the next Republican President would benefit from the tax cuts he or she would give him or herself. And after Ronald Reagan tripled the national debt and George W. Bush doubled it, we need to know what it will cost the rest of us.
(This piece also appears at Perrspectives.)