There's a conservative tax plan you're not hearing about, and it could be good for kids
Things have officially gotten ugly on the campaign trail.
By now, you've heard the back and forth claims from the Romney and Obama camps.
What's easy to forget is that all of this incendiary rhetoric came out of the usually-boring world of tax policy. The claim from the Obama camp is that Mitt Romney's tax plan would help rich people and businesses, while shifting more of a burden on low- and middle-income taxpayers.
As I've written before, the claim has some merit. But it is far from the end of the story.
Turns out, there is a conservative tax plan that would lower the burden on businesses and low-income families at the same time. It's just not getting any attention right now.
Robert Stein is a former political insider and well-respected economist from the conservative ranks of Washington D.C.
That profile hasn’t helped him win over many people, particularly political conservatives, with his idea for lowering taxes for many middle and lower income families.
Stein’s plan has lots of things that sound like familiar ingredients of most conservative tax-reform proposals; it mentions lightening taxes on corporate profit and cutting individual taxes on inheritances and capital gains.
But what puts Stein’s tax outside the scope of the current tax debate is that he would like to use the tax code to reward people for being parents.
Stein came up with this idea in the late 1990’s, when he was an economist for Congress’ Joint Economic Committee. He said he was frustrated that conservatives and liberals (as he calls the two sides of the political spectrum) “kept talking past each other.”
Stein says while conservatives were focusing on cutting the marginal tax rate, “Liberals were talking about cutting the tax bill for the middle class and below, and neither side was realizing that these two goals are not completely incompatible.”
Stein’s solution is to make the Child Tax Credit bigger. He’d like to boost it from $1,000 to $4,000 per child and cut out the Earned Income Tax Credit for people who claim the child credit. He thinks this can simplify the tax code and stimulate some economy boosting spending among the lower and middle classes. Stein thinks parents should get a break for raising kids not just because they’re expensive (about $13,000 a year on average) but because parents should get a tax benefit for raising the people who will grow up to support the entire country’s Social Security and Medicare programs once they become workers.
“Most conservative economists believe incentives matter everywhere except in the home.” Stein says. He points out that if cutting taxes are supposed to work to spur spending and investment for higher income individuals and corporations, (something he believes to be true), then there is no reason not to believe lowering taxes for middle and lower class families would stimulate spending too.
Stein thinks his plan hasn’t gotten more traction (it’s been featured in a few journals and gotten a shout out on the American Enterprise Institute’s website) because it would increase the marginal tax rate for some people, particularly single people without kids. Politically, he knows that any increase in taxes is unlikely to go very far. But as a conservative economist he’s comfortable with it, and thinks his plan would be a good way to help conservatives and liberals meet somewhere in the middle.
Right now, Stein isn’t pushing his plan very hard. He’s a senior economist for a private financial firm and he’s just busy. “I came up with this plan before I had kids,” Stein says. “I thought it was a good idea then. Now, I think it’s an even better idea.”