Republican Candidates Push Bold Tax Plans

Republican presidential candidates are competing to propose dramatic changes to tax policy that go well beyond the party’s previous platforms and all but ensure the issue will play a central role in the general election.

Driven by a desire to stand out in a crowded field and spark economic growth, the GOP contenders no longer just say they want to lower rates and expand the tax base. Their new ideas, once the province of right-leaning think tanks, make previous Republican plans look timid.

Nearly all the GOP candidates—who will meet again Tuesday evening in a debate hosted by Fox Business Network and The Wall Street Journal—are promoting at least one tax idea the party hasn’t tried to sell to a general-election audience.

Among them: eliminating both payroll and corporate taxes and introducing a broader business tax in their place. Donald Trump, a front-runner, has proposed a tax cut that by one estimate would put federal collections at their lowest since World War II.

“It doesn’t seem like there’s anything constraining these guys,” said Alex Brill, a former GOP congressional tax staffer now at the American Enterprise Institute, a conservative think tank. “The next guy that’s announcing his plan, he’s going to announce a plan that’s bigger and bolder and better than the last guy. And then he can win that debate.”

Campaign platforms on taxes matter. Each of the past three presidents ran in part on a tax plan and each got much of it implemented by the end of his first term. And no matter who emerges from the primary season, the contrast between Republican proposals for tax cuts and Democratic ideas about tax increases on top earners will be starker than before.

Previously, ambitious tax plans largely were limited to self-financed candidates, such as magazine billionaire Steve Forbes, who in 1996 proposed a flat tax, or outsiders trying to crack the top tier, such as Herman Cain in 2011.

Democrats are primed to make the case that the bold Republican plans would provide the biggest benefits to the wealthiest households and balloon the federal deficit.

“You’re seeing this bidding war among Republican candidates to have the most aggressive tax cut, and that debate is taking place completely outside of any sense of fiscal reality,” said Harry Stein of the Center for American Progress Action Fund, a Washington group aligned with Democrats.

How much tax cuts can juice the economy is in dispute. Democrats point to the economy’s growth after President Bill Clinton raised top rates in 1993 and President Barack Obama lifted rates in 2013, and to the recession that occurred after President George W. Bush cut taxes, as proof that rates for the top few percent of households aren’t the biggest drivers of economic expansion.

“This is going to be the issue of the presidential campaign, once Republicans have settled on their candidate,” said Stephen Moore, a conservative analyst and former Wall Street Journal editorial board member who helped write Sen. Rand Paul’s plan. “It’s going to be Republicans trying to sell the message of growth through tax rate reductions and Democrats trying to sell the message of redistribution and income inequality.”

Mr. Paul, of Kentucky, and Sen. Ted Cruz of Texas want to eliminate payroll and corporate income taxes in favor of a national tax on consumption, via a value-added tax that would be assessed on businesses and absorbed in wages and prices.

A third senator, Florida’s Marco Rubio, proposes eliminating taxes on capital gains and dividends for new investments, and raising tax credits for people with children, part of his bid to appeal to the middle class.

Gov. Bobby Jindal of Louisiana wants to scrap the corporate income tax and create a 2% personal tax bracket that would add lower-income people to the income tax rolls, as a way of disabusing the public of the notion that “money grows on trees in Washington.” That would reverse a decadeslong bipartisan trend of using the tax system to bolster take-home pay for the poorest households, which generally don’t pay income tax today.

Carly Fiorina, former chief executive of Hewlett-Packard Co., says on her website she wants the tax code to be three pages long, which is “about all an individual can understand without having to hire an accountant, a lawyer, a lobbyist.” That’s a tall task. The bill to create FairTax, a national retail sales tax promoted as a simple system by candidate Mike Huckabee, the former Arkansas governor, is 131 pages.

The candidate backed by some of the party’s Washington establishment, former Florida Gov. Jeb Bush, wants to allow companies to write off capital purchases immediately, an idea that goes in the opposite direction from the plan released last year by former Rep. Dave Camp (R., Mich.), then chairman of the House Ways and Means Committee.

Mr. Trump, meantime, has proposed a tax cut that would put federal collections at their lowest level since 1942, according to the Tax Foundation, though his campaign calls that figure “wildly off the mark.”

The other front-runner, Ben Carson, promotes a flat-tax plan based on the concept of Biblical tithing that he hasn’t fully specified. The retired neurosurgeon said Monday on Fox Business that the tax rate would be about 15%, that he would “eliminate all the deductions and all the loopholes” and that his plan would include a tax holiday for U.S. companies to bring back foreign profits stockpiled abroad.

Then there is Ohio Gov. John Kasich , who knocked his rivals’ proposals as “fantasy tax schemes” during the last GOP debate. Mr. Kasich favors full, immediate write-offs of company capital costs and the elimination of certain tax breaks. He says his tax reductions and accompanying spending cuts could lead to significant economic growth and a balanced budget.

Last year, Mr. Camp proposed a revamp of the tax code to lower rates and curtail breaks. He and the GOP’s 2012 presidential nominee, Mitt Romney, both tried, and struggled, to operate inside two important constraints: to avoid boosting budget deficits or shifting the tax burden away from high-income households. Today’s candidates aren’t making such promises.

“Some of the plans are big. They’re bold and they’re surprisingly detailed,” said Mr. Camp, now an adviser at PricewaterhouseCoopers LLP. “We all know our system is broken and you’re seeing that reflected.”

Richard Rubin