Santorum's Tax Plan: Good for South Carolina, Bad for America
NEW YORK ( TheStreet ) -- Senator Rick Santorum's tax plan falls short of real success, but it might be the right card to play headed into South Carolina.
Much of Santorum's plan looks like his opponents'. He favors simplifying the tax code into two brackets: 28% for top earners and 10% for lower income workers. The latter would pay 60% less in tax and could save $7,500 a year. Those making $10 million, for example, would see their taxes fall 20% and pay about $700,000 less.
Unlike his opponents, Santorum also favors tripling the deductions for children. According to Joe Rosenberg, research associate at Urban Brookings Tax Policy Center, this could take lower income household's tax rate to zero but offer them no rebate. The less money they make the less profitable this deduction will be.
"For more low and middle income households ... their benefits may be limited," says Rosenberg, "certainly for more middle and higher income people with kids it would be a potentially substantial reduction in their taxes."Santorum treads the line on other Republican favorites like lowering the capital gains tax to 12%, eliminating the estate and marriage tax and reducing the corporate tax rate to 17.5% from 35%. The area where Santorum really stands out in is in manufacturing. Santorum would lower the corporate tax rate for the sector to 0% and also give a 0% tax rate for companies repatriating their money, as long as they sink their cash into manufacturing equipment. His bias for manufacturing might play well in South Carolina, a state with nearly 10% unemployment. Manufacturing is the fastest hiring sector in the state. It currently employs 11 million people up 5.2% in the past 12 months, but for the rest of the country manufacturing is not where the growth is.
>To contact the writer of this article, click here: Alix Steel.
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