Republican presidential candidate Marco Rubio defended his tax proposal Wednesday, responding to Democratic critiques that it would increase the budget deficit and Republican complaints that it doesn’t cut rates enough.
Rubio, a Florida senator who announced his presidential campaign Monday, said his plan would spur economic growth to partly pay for itself and be paired with cuts in planned Medicare and Social Security spending.
To those wanting lower marginal rates, he said the expanded child tax credit is part of a fair tax system and isn’t spending in disguise. Rubio spoke at the Heritage Foundation in Washington on the annual tax-filing deadline for individuals.
“This is not a redistribution because this money doesn’t belong to the government in the first place,” he said.
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Rubio’s comments show the balancing act he faces as he tries to stand out in a crowded Republican field and position himself to appeal to middle-class voters.
Rubio’s plan, developed with fellow Republican Senator Mike Lee of Utah, would cut tax rates on business income and eliminate taxes on capital gains, dividends and estates.
The corporate tax rate would drop to 25 percent from 35 percent, and the tax rate on business income earned outside of corporations would also be 25 percent, down from 39.6 percent now. Rubio and Lee would cut the top tax rate on wage income to 35 percent.
Those changes would make U.S. companies more competitive around the world, Rubio said.
“There will be higher-paying jobs that provide more upward mobility created in the 21st century,” Rubio said. “The question for Americans is how many of them will be created here versus somewhere else.”
Rubio and Lee’s plan would create a $2,500 child tax credit and a refundable personal credit to replace the standard deduction and personal exemptions.
“These are America’s future taxpayers,” Rubio said. “And it is important for families in the 21st century to keep more of their money.”
Eliminating the child tax credit would allow for a 2 percentage point reduction in the top tax rate, he said. Other Republicans have proposed top tax rates of less than 30 percent.
Those features, which provide direct benefits to middle- class families, have drawn criticism from Republicans who would rather reduce tax rates further.
Democrats, on the other hand, warn that the plan would expand the federal budget deficit because it would deprive the government of trillions of dollars in revenue over a decade. Even the plan’s proponents concede it would reduce tax collections by at least $1.7 trillion in the first decade, after accounting for economic growth.
Ultimately, Lee said, the plan will pay for itself.
“Anything that enhances freedom and is pro-family and pro-growth is going to be good for our country and our economy,” said Lee, who spoke at the same event.