Tim Pawlenty has a plan for America, and it would force the government out of just about every sphere of American life where it exists now.
Pawlenty’s tax plan, by design and effect, would dramatically erode the government’s revenue base. As noted here, his plan would reduce the top individual income tax rate from 35 percent to 25 percent, cut the top corporate rate from 25 percent to 15 percent, and allow pass-through corporations to pay taxes at the corporate — not the individual — rate. He also wants to completely eliminate capital gains taxes, taxes on dividends and interest, and the estate tax.
An independent analysis found that it would cost the Treasury over $11 trillion over the course of a decade — nearly three times the cost of the Bush tax cuts — most of which would benefit the wealthiest Americans.
But how severe would the upward redistribution be? The Center on Budget and Policy Priorities crunched the numbers and came up with a handy chart.
After taxes, the very wealthiest people in the country would see their after-tax income spike by over one-third. Those on the other end of the income spectrum would hardly notice the bump. And that’s to say nothing of the fact that, without all that revenue, the government would no longer be able to fund the services many middle class and lower income Americans depend on.
From CBPP: “In 2013 the Pawlenty plan would give people in the top one-tenth of 1 percent on the income scale (i.e., people with incomes above $2.7 million) an average annual tax cut of $1.8 million”
His plan is driving the debate among GOP presidential hopefuls. Though not all of them will ultimately match his cuts or exceed them, they will certainly be using it as a benchmark.
Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight, and the debt limit fight. He can be reached at firstname.lastname@example.org.