We continue with our review of the candidates remaining in the presidential race and the economic programs they would put in place should they make it to the White House.
Marco Rubio is one of the three candidates remaining in the contest for the Republican ticket.
As a result of his mixed Cuban and American backgrounds, Rubio’s economic plans are a blend of conservative Republican values and his family roots. The centerpiece of his campaign is building what he calls "A New American Century," where much needed changes lead to economic prosperity and opportunity.
If elected president, Rubio would endorse fewer taxes for corporations and individuals and an additional child tax credit of $2500 to offset income and social security taxes for families below a certain income threshold. Additionally, he would initiate changes in the social security structure whereby he would phase in a reduction in costs by reducing benefits for upper income seniors to provide more for lower income groups.
Rubio revealed his economic vision last May but no reports of any changes have hit the media so we can assume his ideas remain intact.
If elected president, Rubio would endorse fewer taxes for corporations and individuals and an additional child tax credit of $2500.
Taxes
Let’s see what Rubio has in store for the American people when it comes to taxes.
According to his plan, Rubio intends to cut corporate tax rates down to 25% and eliminate taxes on capital gains and dividends. His plan also simplifies income tax by eliminating a number of deductions and establishing two income-based tax brackets that will levy taxes of 15% and 35% on individuals.
Although this comes across as a positive proposal, it could have mixed results. According to the Tax Policy Center, Rubio's plan could result in an estimated $2.4 trillion revenue loss for the economy. The non-partisan Tax Foundation estimates the loss at $4 trillion. However, at the same time, it would add 7 million jobs and ensure a 15% GDP growth over a decade, equivalent to an average of additional annual growth of 1.44% over a 10-year adjustment period.
Social Security
Rubio hopes to modernize social security with three changes. He would revise the retirement age upwards, redistribute income from wealthier retirees to those from the lower class, and include social security in employment-based plans and personal finance assets like an IRA.
The proposal to raise the retirement age for social security could prove detrimental to workers because it reduces the monthly payout amount significantly.
Oil
Among the pillars of Rubio’s energy platform is what he has called "optimizing America's resources" which includes approving the Keystone Pipeline, lifting the ban on crude exports, rewriting the Obama administration's five-year offshore drilling plan and expediting the approval of natural gas exports. He has also promised to cut back government regulation on energy companies, cut their taxes and look to the private sector for energy-related innovation.
The implementation of these ideas and a subsequent increase in oil and natural gas drilling would likely lead to a drop in fossil fuel prices, which in turn would give the economy a quick boost. Big energy companies would benefit, as would their shareholders.
However, according to analysts, the cheaper oil prices are already in place and they are not certain that the decision to boost the oil industry at the expense of renewable energy would turn out to be the best decision.
Child Tax Credit
Part of Rubio’s tax plan is an increase in the child tax credit.
However, the Tax Foundation concluded that this increase would cost $170 billion and would have almost no impact on economic growth. One way to reduce the expense of the credit would be to implement it on a staggering scale with higher income families receiving little to no credit. But, according to the Foundation that would be a “case of penny wise and pound foolish." In their view, in addition to being complicated, a phase out would create a potentially large marginal tax rate spike which would worsen economic incentives within the phase-out zone, thereby slowing growth and removing much of the revenue the phase-out would supposedly be collecting.
Mr. Rubio is also vowing to revamp the higher-education system by expanding access to trade schools and for-profit colleges and making it easier for students to secure federally protected loans. He promised to “bust” the higher-education “cartel” dominated by existing colleges and universities.
In short, Senator Marco Rubio's economic blueprint is an interesting combination of his background and conservative perspective that encourages GDP growth and a continuation of social welfare benefits. However, many analysts believe that the growth may come at the expense of extreme economic costs.