By Patrick O'Connor 

Louisiana Gov. Bobby Jindal, seeking to breathe life into his presidential campaign, is taking a sharply different approach to tax policy than his Republican rivals.

The presidential contender plans to unveil a tax plan Wednesday in Iowa whose goal is to make all citizens pay at least some measure of federal income tax. That puts Mr. Jindal at the center of a long-running debate over who foots the cost of federal spending.

"We simply must require that every American has some skin in this game," Mr. Jindal said in a written statement. "If we have generations of Americans who never pay any taxes, it will be very easy for them to turn a blind eye to absurd government spending and to continue to allow our government to bankrupt our nation."

Mr. Jindal's plan seeks to compress the current seven tax brackets to three, with those in the lowest rung paying a 2% rate. It would also eliminate most deductions, including those that allow millions of Americans to pay nothing in federal income taxes.

Mr. Jindal takes a different tack on taxes than his GOP rivals, particularly those looking to shield more Americans from paying federal income taxes at all, including former Florida Gov. Jeb Bush and real-estate developer Donald Trump. Mr. Bush would nearly double the standard deduction and estimates under his plan that roughly 15 million additional Americans would "no longer bear any income-tax liability."

Mr. Jindal's proposal would eliminate the standard deduction and the $4,000 personal exemption. That means a family of four would pay taxes on at least $28,600 in income that would be protected from the Internal Revenue Service under the current tax code. Mr. Jindal proposes a nonrefundable tax credit that could replace some of these deductions for households with children under the age of 18, or people older than 65 who make less than $5,000. He didn't offer specifics on how this might work.

"Jeb [Bush] and [Donald] Trump are campaigning on a promise that they are going to move more people off of the tax rolls," said Bob Williams of the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute. "Jindal is going the other way."

In addition to his call for lower rates and fewer deductions, Mr. Jindal also wants to eliminate corporate taxes, the estate tax and the Alternative Minimum Tax, as well as all the taxes in the Affordable Care Act. He would scrap itemized deductions, though he would exempt some of the biggest and politically sensitive, such as those for charitable contributions and mortgage interest.

These changes would have a profound impact on the size and scope of the federal government. Mr. Jindal estimates his changes would reduce the federal tax revenue by $9 trillion, or 22%, over 10 years. He also predicts the gross domestic product would grow at more than 4% a year, and that wages would grow at more than twice that pace.

Mr. Jindal's proposal speaks to a continuing debate in American politics over who should pay federal taxes, one that tripped up the GOP's 2012 presidential candidate, Mitt Romney. The Tax Policy Center estimates that 45.3% of households will not pay federal income taxes this year. Roughly half don't make enough money. The others qualify for deductions and credits that allow them to reduce their tax burden to zero, though many still pay Medicare and Social Security taxes.

It is not clear whether all taxpayers would be forced to pay some share of their income to the federal government under Mr. Jindal's proposal. He keeps the Earned Income Tax Credit, for example, which allows many lower-income households to eliminate their tax burden--and to sometimes get payments from the government instead.

Mr. Jindal has built his campaign around pushing novel policy ideas within the GOP. He was the first Republican to outline a possible replacement for the 2010 health law. But his proposals have done little to boost his standing in the GOP field and he has lingered near the back of the pack all year.

In the release announcing his plan, Mr. Jindal acknowledged it would be controversial for exposing lower-income Americans to taxation. "It re-establishes the idea that, in America, everyone is expected to help row the boat," he said in the release. "Independence, not dependence, is the root of the American Dream. It's time we had the guts to say so in public."

(END) Dow Jones Newswires

October 06, 2015 19:14 ET (23:14 GMT)