The holes in Rick Santorum’s tax plan

    Many experts argue that Rick Santorum’s vision “to restore America’s greatness through promotion of freedom and opportunity for all” won’t do anything of the sort.

    When describing his plan to jump-start the U.S. economy, the website of GOP presidential candidate Rick Santorum waxes poetic when it speaks of his vision “to restore America’s greatness through promotion of freedom and opportunity for all.” Unfortunately, many experts argue it won’t do anything of the sort.

    Like the other Republican candidates, the former Pennsylvania senator, whose strong second-place showing in Iowa rocked the party’s political Establishment, believes taxes are too high and government is too big. Santorum is calling for two-tiered tax rate system on personal income taxes and wants to slash the corporate tax rate from 35% to 17.5%, to make U.S. business more competitive globally.

    Other highlights of his plan include eliminating the corporate income tax for manufacturers. In addition, he calls for ending the so-called marriage penalty and for tripling the personal deduction for each child. The fact that Santorum is a father of seven and a foe of abortion might explain that unusual proposal.

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    “In Rick Santorum’s world, married couples with a gaggle of children will rule. It’s as if Santorum wants to turn back the clock 40 or so years by using economic policies to encourage Americans (heterosexual Americans, that is) to marry and produce children,” writes Nancy Cook at the National Journal.

    During his 16-year career in the U.S. Congress, Santorum generally earned kudos for his stance on fiscal issues from conservative groups such as the Club for Growth and the National Taxpayers Union, which rated him above average compared with other Republicans. He consistently “supported broad-based tax cuts and opposed tax increases,” according to the Club For Growth’s website.

    Still, the organization’s take on Santorum is hardly enthusiastic, calling his spending record “mixed.” “As president, Santorum would most likely lead the country in a pro-growth direction, but his record contains more than a few weak spots that make us question if he would resist political expediency when it comes to economic issues,” the group says.

    His current policies aren’t winning Santorum friends among fiscal conservatives.

    Santorum’s plan is generous to a fault, light on specifics and needs to pare his tax breaks with corresponding spending cuts, according to Will McBride, an economist with the Tax Foundation, which gave the candidate’s plan a “D+” — the lowest grade of any of the GOP presidential contenders.

    “It would result in much lower revenues,” McBride says, adding that not having the spending cuts would make Santorum’s plan “not fiscally conservative or responsible. His tax cuts don’t clearly lead to economic growth.”

    According to McBride, Santorum hasn’t elaborated on which taxpayers in what brackets would pay for the 10% and 28% rates under his plan. His proposal to eliminate corporate taxes for manufacturers will lead to large number of businesses in divergent industries claiming to be manufacturers, potentially depriving the U.S. Treasury of hundreds of billions revenue.

    “This is unprecedented, and we don’t know what would happen,” McBride says.

    Howard Gleckman of the Tax Policy Center argues that Santorum’s proposal to slash federal spending by $5 trillion over five years would harm many of the same families who would benefit from his tax breaks because of the cuts Santorum’s plan would make to domestic programs such as Medicaid and food stamps.

    “Interestingly, by using tax expenditures to support these families, Santorum would likely add significantly to the number of households that pay no income tax,” he writes in a blog post.”If he somehow gets the nomination, he’ll still have to explain the huge hole he’d blow in the budget.”

    In an interview, Gleckman says he can’t provide more specifics about Santorum’s plan because it lacks sufficient data. An email to the Santorum campaign wasn’t immediately returned.

    Jonathan Berr is a contributor to InvestorPlace, a financial news and investing site.

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