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Presidential candidate John Kasich today released a tax proposal that is in lock step with other Republican candidates’ plans. Most basic details are missing, but it is clear Kasich’s plan would lavish substantial tax breaks on the best-off Americans while blowing a huge hole in the federal budget. This plan is not surprising. As governor of Ohio, Kasich has supported and signed regressive tax proposals.
The centerpiece of Kasich’s plan is a drastic cut in the personal and corporate income tax rates. For the richest Americans, Kasich would cut the top tax rate from 39.6 to 28 percent and slash the tax rate on capital gains to 15 percent. He would outright repeal the estate tax.
For corporations, Kasich proposes dropping the rate from 35 percent to 25 percent and allowing companies to immediately write off their capital expenses. Kasich would also allow U.S. companies to avoid ever paying a dime on profits they shift offshore by moving to a “territorial” tax system.
The elements of Kasich’s blueprint are virtual carbon copies of plans put forth by Jeb Bush and Donald Trump. What sets Kasich apart is that he seems uninterested in closing tax loopholes to pay for his aggressive tax cuts. On the corporate side, he apparently doesn’t see a single corporate giveaway worth repealing. And although closing the “carried interest” loophole has gained bipartisan support, Kasich’s proposal does not address this tax giveaway to wealthy money managers.
All of this means the revenue impact of Kasich’s plan would likely be just as devastating as the Trump and Bush plans, both of which would cost trillions over a decade. The only question is precisely how many trillions of dollars Kasich’s plan would cost.
At the moment, it is nearly impossible to project how his plan would affect families at varying income levels because he proposes reducing the number of tax brackets from seven to three, but the limited details he has provided do not include income levels for his proposed tax brackets.
The lowest income families could very well get a tax cut because Kasich proposes a 10 percent increase to the Earned Income Tax Credit, but some middle-income families could experience a tax increase because Kasich’s plan implies that he would repeal all itemized deductions other than charitable contributions and mortgage interest.
If Kasich’s goal is to set himself apart from the competition in the presidential tax cut sweepstakes, he hasn’t achieved it. What’s most striking about the Kasich plan is just how closely it hews to the disastrous fiscal blueprint of those candidates who have gone before him.