There are five basic legal forms of business structures found in the United States: C corporations, S corporations, sole proprietorships, partnerships, and Limited Liability Companies (LLCs). In order to understand...
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- The GPA of the GOP: Do Taxes Matter?
The GPA of the GOP: Do Taxes Matter?
According to most surveys, the economy still ranks as the most important issue on GOP voters' minds as they head to the polls. Among the drivers of a strong US economy are consumer spending, industry investment, the export/import ratio, and government spending.
Tax policy, for better or for worse, affects each one of these. Yet the tax reform proposals which have been put on the table by GOP presidential candidates appear to matter very little to voters.
This year's GOP presidential caucus in Iowa yielded the following results:
1. Mitt Romney (25%)
2. Rick Santorum (25%)
3. Ron Paul (21%)
In the Tax Foundation's Presidential Candidate Tax Plan Report Card, Mitt Romney, Rick Santorum, and Ron Paul received grades of C-, D+, and B-, respectively. If the GOP were taking three college classes, this would result in a 1.9 GPA. The Iowa GPA is helped most by the corporate tax rate cut to 15% proposed by Paul. Still, a 1.9 would put the student on academic probation at most institutions.
The situation didn't look much better for the GOP in the New Hampshire primary. The state's top three vote-getters were:
1. Mitt Romney (39%)
2. Ron Paul (23%)
3. Jon Huntsman (17%)
On the report card, these three candidates' tax plans received a C-, B-, and B+ respectively. The GOP student in this scenario would have achieved a 3.0 GPA.
However, if one weights the grades according to the percentage of votes the candidates received, the results are largely driven downward by the C- and B- of Romney and Paul. Using this methodology to account for the higher variance of results in New Hampshire, the GOP student sees their GPA sharply decline to a 2.3.
What's mystifying about these results is not who the most popular candidates are. It is the underlying disparity between what voters claim is the number one issue, the economy, and their willingness to accept timid tax plans that would keep the complexity and litany of tax preferences part of the current tax code.
GOP voters certainly have the right to choose their preferred candidate for any reason they wish: treatment of social issues, eventual electability, or even looks. But if the party, like the rest of the country, wants an economic turnaround, taxes must play a major role. In that vein, many may wish to read economist Will McBride's How to Judge a Tax Plan in which he delineates the criteria upon which one can base their decision regarding whether certain tax reforms are good, satisfactory, or harmful.
It is certainly true that a number of college dropouts have gone on to do great things—in some cases boost US gross domestic product almost singlehandedly (Bill Gates, Steve Jobs, Mark Zuckerberg, etc..). But the US cannot afford a sophomoric tax plan with a GPA that would place it on academic probation.
It needs one that would make the dean's list.
Follow David S. Logan on Twitter @Loganomix
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