With Newt Gingrich evidently back in the primary game after last night’s convincing win in South Carolina, I thought it might be a good idea to take a look at the centerpiece of his economic agenda—an ambitious tax cut. Something important to understand about modern American politics is that even though presidential candidates jostle against each other a lot there are relatively few cleavages within the party coalitions, and certainly taxes are something that unify the GOP. Every single candidate from the wacky Herman Cain to nice guy John Huntsman is running on the premise that taxes should be reduced relative to current policy, especially on high-incomes and on investment income. Gingrich is no exception to that rule as this chart based on Tax Policy Center analysis will show:
One respect in which Newt stands out from the pack somewhat is that essentially everyone’s taxes go down at least a little under the Gingrich Plan. Most of the Republican contenders are currently preparing to raise taxes on a large number of lower income families who benefit from what are called refundable tax credits. These are tax credits that can reduce your income tax burden to below zero, in effect offering you a cut in payroll taxes without reducing your eligibility for Social Security benefits. Normal people don’t differentiate sharply between income taxes and payroll taxes, but as part of the conservative movement’s relatively dour turn during the Obama years a lot of people have become very upset at the fact that some people have no net federal income tax burden and believe that the pain needs to be shared a bit more widely.
Gingrich, temperamentally, is more of a throwback to the Reagan-Kemp mood of sunny optimism and I think his lack of zeal for rescinding poor people’s tax credits reflects that. Obviously the main priority of Gingrich’s plan (like Rick Santorum’s and Mitt Romney’s and everyone else’s) is on the alleged overtaxation of high-income individuals, but if you want to see some policy daylight between them this is what I have to offer.