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Jindal: Everyone should pay income tax
Gov. Bobby Jindal (La.) proposed Wednesday to force all households to pay some income tax, taking the opposite approach of candidates ahead of him in the GOP presidential race.
Jindal called the idea of taking more taxpayers off the tax rolls - proposed in recent weeks by both billionaire businessman Donald Trump and former Florida Gov. Jeb Bush - a "terrible mistake."
Instead, Jindal calls for a bottom tax rate of 2 percent and scraps the standard deduction and personal exemption that allow many taxpayers to avoid owing income tax.
"My plan only asks 2 percent from the bottom bracket, but that may be the most important two percent in the whole plan," Jindal said in rolling out his plan, later adding, "Every citizen needs to help row the boat, even if only a little."
Jindal's plan could reignite the debate among Republicans over how widely the income tax burden is distributed, an issue that dogged the GOP in 2012 after Mitt Romney complained that the "47 percent" of people who don't pay income taxes reflexively backed President Obama. Trump's plan includes a zero percent tax rate for lower-income individuals, and Bush has made his proposal to take millions of people off the income tax rolls a selling point.
The Urban-Brookings Tax Policy Center says that an estimated 45.3 percent of households don't pay federal income taxes. But the majority of those taxpayers work, meaning they owe payroll taxes, and the vast majority of citizens contribute some sort of tax revenue.
In his plan, the Louisiana governor reduces the seven individual income tax brackets to three and gets rid of the corporate tax, estate tax and alternative minimum tax altogether. ObamaCare tax increases would be eliminated as well.
Most people would fall in the 10 percent tax bracket, which covers annual income from $20,001 to $180,000 for married couples and $10,001 to $90,000 for single people.
The top tax rate would be 25 percent, and Jindal would get rid of all but five tax breaks. The popular and expensive deductions for charitable contributions and home mortgage interest would be unchanged.
Jindal also seeks to overhaul the earned income tax credit, which would be transferred to the payroll tax, and the exclusion for employee health insurance, which would become a deduction for insurance costs whether provided by an employer or not. Families could claim a nonrefundable credit for dependents as well.
Jindal acknowledged that the plan would aid the highest earners the most, but he asserted that his plan would grow the economy, increase wages and add jobs.
Like other GOP candidates, Jindal is billing his plan as a huge tax cut. On its own, the Louisiana governor's plan would add $9 trillion to the deficit over a decade, according to projections included with the proposal.
Romney in 2012 went out of his way to say that his tax plan wouldn't add to the deficit and wouldn't be a boon to the wealthy.
Outside analysts were skeptical of that claim. But with deficits on the decline, the current crop of GOP candidates haven't been shy in talking up their tax cuts.
"The only way to shrink the size and influence of Washington is to starve it," Jindal said.