GARNER, N.C. – Republican presidential candidate Jeb Bush laid out a tax overhaul plan Wednesday that calls for a lower corporate tax rate for businesses and immediate tax deductions for business investments to help create millions of jobs and boost economic growth.
For individual taxpayers, Bush proposes doubling the standard deduction, eliminating the so-called marriage penalty, expanding the popular Earned Income Tax Credit and ending the estate tax and Alternative Minimum Taxe. But he would end the deduction for paying state and local taxes and limit the mortgage interest deduction popular with homeowners.
He outlined the plan on a visit to North Carolina, a coveted swing state that holds its primary March 1 along with several other Southern states. President Barack Obama won the state in the general election in 2008, but Republican nominee Mitt Romney carried it in 2012.
“We need to jump-start our economy, and we can do that by fixing our broken tax code,” Bush said. “It’s a disaster.”
He spoke at Morris & Associates, a manufacturing firm with 100 employees, to show how small businesses would benefit from his proposal. The company makes cooling equipment for scores of businesses, from poultry processors to nuclear power plants.
Bush said the tax code is “full of special favours, carve-outs, phase-outs and subsidies — that you pay for, one way or another.”
“My plan works whether you’re on Main Street or Wall Street,” he said. “No special favours. No special breaks.”
Bush, who trails in the polls nationally and in early primary states, has offered up several policy proposals in recent weeks to counter GOP front-runner Donald Trump, who’s been throwing personal digs at him.
Bush criticized Trump and Democratic front-runner Hillary Rodham Clinton, saying the two seem to think America can’t compete with the rest of the world. They “may not believe we can do it, but I sure as heck do,” he said.
Bush said he wants to create a tax code that is “simple, fair and clear,” and predicts it will help the economy grow 4 per cent annually, a target many economists say is highly unrealistic.
Under his plan, Bush wants to reduce the corporate income tax from 35 per cent — among the highest in the world — to 20 per cent and give businesses the chance to deduct new capital investments immediately. He also wants to eliminate the interest deduction for business loans.
Another part of his plan would allow U.S. companies to pay taxes only on profits earned in the U.S., one of the few countries that require corporations to pay taxes at home for their overseas earnings. Bush would let firms “repatriate” profits now being kept abroad by paying no more than 8.75 per cent tax on those earnings.
Individual taxpayers would see the number of tax brackets reduced from seven to three: 10 per cent, 25 per cent and 28 per cent. Currently, there are seven tax brackets, ranging from 10 per cent to 39.6 per cent. A family of four earning $40,000 or less would pay no federal income tax, according to the Bush campaign.
He also would eliminate deductions for state and local taxes because they are “unfair” to those living in low-tax states and cap the mortgage interest deduction at 2 per cent of adjusted gross income. But he would raise the standard deduction to $22,600 for married filers; $11,300 for single filers. Currently, married filers receive a standard deduction of $12,600; single filers, a $6,300 standard deduction.
William Gale, a former economic adviser to President George H.W. Bush and now co-director of the Tax Policy Center, said Bush’s plan resembles part of Romney’s 2012 plan, but the impact on government revenues and how it would grow the economy remains to be seen. “It’s a legitimate starting point for a debate,” he said.
Matt Callahan, president of Callahan Construction and Development, a Raleigh-based company that operates in 17 states, said he was impressed with Bush’s plan for a tax overhaul. “Everyone talks about it, but no one is laying it out there,” he said.
Democrats bashed the plan as “more trickle-down Bush economics.”
“Bush is embracing a disastrous economic agenda that benefits himself, and those like himself, while leaving the middle class out to dry,” said Holly Shulman, a spokeswoman for the Democratic National Committee, in a statement.
This story has been corrected to reflect that Bush’s proposed middle tax bracket for individual taxpayers is 25 per cent, not 15 per cent.
Bustos reported from Miami.