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Rubio Tax Reform Plan 

Presidential hopeful Senator Marco Rubio has released his proposed "Rubio-Lee Tax Reform Plan." The Tax Foundation has conducted thorough research and analysis on the plan. The key findings are included below. The plan attempts to drive growth by creating lower cost of investment (i.e. full expensing, corporate integration, lower tax rates on business) and by increasing incentives for people to work (in the form of lower rates on personal income).

The key features of Rubio-Lee plan as reported by the Tax Foundation:

  • Personal Income Taxes
    • New child tax credit ($2,500) no income cap.
    • Two brackets (15% and 35%).
    • Eliminate all itemized deductions except charitable contributions & mortgage interest deduction.
    • Replace standard deduction and personal exemption with refundable personal credit.
  • Business Taxes
    • Top tax rate of 25% for both corporate and noncorporate business income.
    • Full expensing for businesses (i.e. business may deduct 100% of the cost of investment in the year it occurs.)
    • Integrate corporate and shareholder dividend taxes to eliminate the "double taxation" applicable to C-Corporations.
    • Eliminate most business tax credits and special deductions.
  • Estate Tax
    • Eliminate the Estate Tax.

Key Findings of The Tax Foundation's Analysis"

  • Economic Growth: Once the economy has adjusted to improved incentives of the Rubio-Lee plan, annual gross domestic product (GDP) will be 15% higher than it would otherwise (equivalent to an extra $2.7 Trillion in terms of 2015 GDP).
  • Rubio-Lee plan would boost business investment by nearly 49%.
  • Rubio-Lee plan would boost wages by 12.5%
  • Rubio-Lee plan would raise level of employment by 2.7 million jobs.
  • Implementation of the Rubio-Lee plan would reduce federal revenue by about $414 Billion annually (on a static basis).
  • On a "dynamic basis", the Rubio-Lee plan will increase federal revenue by an annual $94 Billion in the long run, but there will be an estimated $1.7 Trillion revenue loss over the first 10 years.
  • Plan would also benefit low-income earnings who will receive a large boost in after-tax incomes.