Yesterday, Indiana’s Republican Senate candidate Dan Coats unveiled his job creation plan while campaigning at a medical parts manufacturer. Like the jobs plan that have been released by other Republican senate hopefuls like Marco Rubio (FL) and Roy Blunt (MO), Coats’ plan is heavy on the tax cuts and fearmongering about government regulation.
Coats calls for permanently extending all of the Bush tax cuts, including those for the richest two percent of Americans that President Obama would like to see expire, as well as eliminating the estate tax and cutting the corporate income tax. But when asked about how much these massive cuts would add to the deficit, Coats freely admits that he has no idea:
He could not say what the fiscal impact of his proposals would have on the nation’s deficit, saying it would need more analysis. “I believe the effectiveness will far outweigh the costs,” he said. “Our hope is that we can come back with a budget neutral (plan) or savings.”
Coming back with a budget neutral plan may be Coats’ hope, but in order to achieve that he’s going to need draconian spending cuts or huge middle class tax increases, because the tax cuts he’s proposing will blow a serious hole in the budget. Extending the Bush tax cuts for the wealthy alone will cost $830 billion over ten years, and eliminating the estate tax is another $784 billion. All of this spending and borrowing will serve to benefit the richest two percent of the country.
As for the corporate income tax, Coats doesn’t actually say how big a cut he has in mind, just that he wants “to make the U.S. competitive with other leading industrial nations.” This is a common conservative trick, focusing on the marginal rate while ignoring that the myriad loopholes and deductions that are in the U.S. corporate tax code result in the U.S. bringing in below average corporate tax revenue for an industrialized nation. For the sake of putting a number on this, the House Republican plan to cut the corporate tax rate to 12.5 percent would cost $2.7 trillion over ten years.
Finally, this is supposed to be Coats’ jobs plan, but according to the Congressional Budget Office, extending the Bush tax cuts is the least effective tax step that could be taken to boost the economy, while cutting the corporate tax rate “is not a particularly cost-effective method of stimulating business spending.” “Increasing the after-tax income of businesses typically does not create an incentive for them to spend more on labor or to produce more,” CBO said.
So let’s call this plan out for what it is: a conservative tax cut wish-list that dramatically lowers taxes for rich people, without even pretending to be fiscally responsible.