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http://www.factcheck.org/2015/10/factchecking-the-cnbc-debates/
Rubio claimed CNBC’s John Harwood was wrong that a Tax Foundation analysis of his tax plan found those in the top 1 percent of earners would get nearly twice the gain as those in the middle. Harwood was right, and that’s on a percentage basis.
Rubio’s Tax Plan
Rubio said CNBC’s John Harwood was “wrong” that the Tax Foundation analysis of his tax plan found “you give nearly twice as much of a gain in after-tax income to the top 1 percent as to people in the middle of the income scale.” But that is what the Tax Foundation found.
Rubio responded that the largest percentage gains would be for those with the lowest incomes, which is also true, according to the Tax Foundation’s analysis. But that doesn’t make Harwood’s statement wrong.
The Tax Foundation concluded that Rubio’s plan, when scored “dynamically” to account for expected economic growth, would result in an after-tax income increase of nearly 28 percent for those in the top 1 percent, while those in the middle income deciles — 40 percent to 50 percent and 50 percent to 60 percent — would see their after-tax income rise by 15.7 percent and 15.3 percent, respectively. People with incomes in the lowest 10 percent would see the greatest percentage gains, nearly 56 percent.
In other words, the greatest percentage income gains would be realized by those with low or high incomes, with smaller percentage gains for those in the middle.
Here’s how the exchange unfolded:
Harwood: The Tax Foundation, which was alluded to earlier, scored your tax plan and concluded that you give nearly twice as much of a gain in after-tax income to the top 1 percent as to people in the middle of the income scale. Since you’re the champion of Americans living paycheck-to-paycheck, don’t you have that backward?
Rubio: No, that’s — you’re wrong. In fact, the largest after-tax gains is for the people at the lower end of the tax spectrum under my plan. And there’s a bunch of things my tax plan does to help them. Number one, you have people in this country that …
Harwood: … Senator, the Tax Foundation said after-tax income for the top 1 percent under your plan would go up 27.9 percent. And people in the middle of the income spectrum, about 15 percent.
Rubio: … Yeah, but that — because the math is, if you — 5 percent of a million is a lot more than 5 percent of a thousand. So yeah, someone who makes more money, numerically, it’s gonna be higher. But the greatest gains, percentage-wise, for people, are gonna be at the lower end of our plan, and here’s why: because in addition to a general personal exemption, we are increasing the per-child tax credit for working families.
Rubio’s tax plan, which he coauthored with Sen. Mike Lee, includes a number of dramatic changes to the current tax code, including a reduction in the number of tax brackets to two (15 percent and 35 percent), the elimination of most itemized deductions (excluding charitable and mortgage interest deductions), and a new child tax credit of $2,500.
The Tax Foundation’s analysis of the plan, released in March, concluded it would increase incomes across all income levels. But some would do better than others.
Looking at the plan on a “static basis,” which does not assume that tax cuts in the plan would spur economic growth, the Tax Foundation said the average gain in after-tax income would be 3.9 percent. But the biggest winners — on a percentage basis — would be those at the bottom and top of the income scale. For example, the analysis stated, the gain would be 11.4 percent for the 10 percent to 20 percent decile, 11.5 percent for the highest 1 percent, but only 1.7 percent for the 50-60 percent decile.
Those disparities are not as dramatic when looking at the tax plan on a “dynamic” basis, which assumes the cuts would lead to significant economic growth. But the general pattern holds, with those at the upper and lower incomes faring the best, on a percentage basis.
So Harwood and Rubio were talking past each other a bit. Harwood was pointing out that those at the top income levels were seeing greater benefit — on a percentage basis — than those in the middle income levels. And that’s true. Rubio, meanwhile, insisted that those at the very lowest income levels would see the greatest percentage increase in income. That’s also true. Rubio further confused the issue with his explanation that “5 percent of a million is a lot more than 5 percent of a thousand.” As we noted earlier, it’s not just that those in the top 1 percent of tax filers would be seeing greater dollar savings in Rubio’s plan than those in the middle income brackets, it’s that those at the top would see a greater percentage gain as well.
http://www.factcheck.org/2015/10/factchecking-the-cnbc-debates/
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