Tax

Santorum plan cuts tax revenues 40 percent: report

Reuters News
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Posted: Jan 18, 2012 7:14 PM
Santorum plan cuts tax revenues 40 percent: report

WASHINGTON (Reuters) - Republican presidential candidate Rick Santorum's tax plan would cut U.S. government revenues by $1.3 trillion, or 40 percent, while offering tax concessions to the candidate's preferred special interests, said a report released on Wednesday.

Compared with current law, Santorum's plan would offer about 81 percent of taxpayers an average tax cut of more than $9,700 a year, said the analysis from the Tax Policy Center, a centrist think tank.

Santorum's plan would collapse the six individual tax brackets to two, at 10 percent and 28 percent. It would cut the top rate on long-term capital gains and qualified dividends to 12 percent from 15 percent, while eliminating the alternative minimum tax.

The Tax Policy Center has previously scored tax plans for Mitt Romney, Newt Gingrich, Rick Perry and former candidate Herman Cain.

In contrast, Mitt Romney's plan would add $600 billion to the deficit in 2015 and cut federal revenues by about 16 percent, the Washington-based group estimated earlier this month.

Santorum, a former two-term senator from Pennsylvania, has tried to distinguish himself as the socially conservative candidate on the campaign trail. His family-first agenda shines through in his tax plan, which calls for tripling the tax exemption for dependent children.

He has said he would eliminate marriage tax penalties in the tax code, but has not explained how, the report said.

By cherry-picking certain special interests for tax breaks, Santorum's plan has drawn fire from some conservatives.

"It is basically social engineering," said Daniel Mitchell, a senior fellow at the Cato Institute and a former Senate Finance Committee economist.

Santorum's plan would cut the corporate tax rate in half - to 17.5 percent from 35 percent. Corporate taxes for manufacturers would be eliminated, but the campaign does not define a manufacturing business.

(Reporting By Patrick Temple-West; Editing by Kevin Drawbaugh and Doina Chiacu)