Former Pennsylvania Senator Rick Santorum finished second in the Iowa caucus last night by a "minivan margin" of eight votes. Losing a state by fewer votes than a Dodge Grand Caravan has seats isn't a loss, really. Especially not when you spent 10% of Rick Perry's campaign on media and got double the votes. But you all know what this means: It's suddenly a two-man race, again (again! (again!!)).
Rick Santorum is not the jobs candidate (that was Perry). He's not the business-experience candidate (Romney). He's not the tax-cut candidate (Cain) or the wonk-with-a-wink candidate (Gingrich). He's the conservative social policy candidate. So, it's no surprise that his tax code is an instrument of social policy.
The best place to start with Santorum's economic policy is with his own family. He and his wife, a longtime neonatal nurse, have seven children together. It is fitting, then, that the most distinguishing part of Santorum's tax plan are incentives for families to become as large as his. He would triple the personal exemption in the tax code for dependent children and eliminate the so-called marriage penalty, which has punished couples with similar incomes when they marry. A Santorum tax code would eliminate the cooling effect on dual-earner marriages and encourage families to have more kids by promising larger per-child savings than the current system.
Like the other candidates, whose tax plans are compared easily in this Tax Policy Center chart, Santorum would reduce tax rates on earned income, investment income, and corporate income. But rather than pay for lower tax rates with fewer tax deductions, Santorum would keep deductions for charitable giving, mortgage interest, employer-sponsored healthcare, and retirement. Santorum would also eliminate the AMT and the estate tax on top of slashing revenue in every part of the tax code except the payroll tax.
So, is it a good plan? If you're a social and fiscal conservative, there is plenty to like. It's a "pro-growth" plan gilded with family values benefits. But the single biggest problem with Santorum's plan is that it's guaranteed to explode the deficit ... unless he finds trillions in spending cuts. He has proposed slashing government spending by $5 trillion over five years, with much of the savings coming from Medicaid cuts, Medicare reform, Social Security privatization, and cuts to income security programs. The spending cuts he identifies overwhelmingly impact the poor, the sick, and the unemployed. This is somewhat inevitable with spending-only solutions to the deficit, since three out of five dollars Washington spends goes to Social Security, Medicaid/Medicare, and defense, which Santorum won't likely cut.
But once again, we have a Republican plan that sidesteps the only reasonable compromise when it comes to tax reform. We can lower rates to promote growth and pay for it by eliminating the deductions that skew incentives and "cost" us $1 trillion a year in foregone tax revenue. You could argue that Santorum's plan does the opposite of this. It keeps the expensive tax breaks targeted at homeowners, workers, families, charities, churches, and children. But poorer families who aren't rich enough to own homes or fortunate enough to find work would find their safety net scaled back to pay for tax cuts that will benefit richer businesses and families.
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