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1 Alan Cole, Details and Analysis of Senator Rick Santorum's Tax Plan 1 (2015)

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FISCAL

FACT
Oct. 2015
No. 485


The Tax Foundation is a 501(c)(3)
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Details and Analysis of

Senator Rick Santorum's Tax Plan


By  Alan  Cole
    Economist



Key   Findings

*   Senator Santorum's tax plan would enact a 20 percent flat tax on individual
    and corporate income, and  repeal a number of complex  features in the
    current tax code.

 *  Senator Santorum's plan would  cut taxes by $3.2 trillion over the next
    decade on a static basis. However, the plan would end up reducing tax
    revenues by $1.1 trillion over the next decade when accounting for
    economic  growth from  increases in the supply of labor and capital.

 *  According to the Tax Foundation's Taxes and Growth  Model, the plan would
    significantly reduce marginal tax rates and the cost of capital, which would
    lead to a 10.2 percent higher GDP over the long term, provided that the tax
    cut could be appropriately financed.

 *  The plan would also lead to a 29 percent larger capital stock, 7.3 percent
    higher wages, and 3.1 million more full-time equivalent jobs.

 *  On a static basis, the plan would cut taxes by 3 percent on average for all
    taxpayers. The top one percent of taxpayers by income would  have the
    highest increases in after-tax income, along with the lowest ten percent.
    However,  some  upper-middle-income  deciles would have  decreases in
    after-tax income.

 *  Accounting for economic  growth, all taxpayers would see an increase in
    after-tax income of at least 7.5 percent at the end of the decade


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