Is Marco Rubio's tax plan progressive?

Rubio insists that it is. At the CNBC debate, he said that "the largest after-tax gain is for the people at the lower end of the tax spectrum."

His comment has led to a bit of controversy. In dollar terms, Rubio's plan is clearly a massive tax cut for the very, very rich. Citizens for Tax Justice, a liberal tax group that does tax modeling, estimates that the top 1 percent would get a roughly $223,000 break under the plan, while someone in the middle of the income distribution would get about $2,500.

So how can Rubio claim his plan is progressive? He's looking at percentages, not dollars. Citizens for Tax Justice estimates that the bottom 20 percent get an average tax cut worth about 14 percent of their income under Rubio's plan, while the top 1 percent get a 12.5 percent cut.

This has kicked off a debate about the proper way to measure progressivity — percentages or dollars. Rubio argues that percentages are the proper measure. "Five percent of a million is a lot more than 5 percent of a thousand," he said in the debate. "So, yeah, someone who makes more money, numerically, it's gonna be higher. But the greatest gains, percentage-wise, for people are gonna be at the lower end of our plan."

My colleague Dylan Matthews isn't buying Rubio's definition. "Tax cuts cost money," he writes. "That money can either go to poor people or it can go to rich people. And under Rubio's plan, much, much more of it would go to rich people."

But all these analyses share a major problem: They only look at half of Rubio's plan.

Spending cuts have consequences

If we take Rubio at his word, he's not only going to cut taxes — he's also going to balance the budget. But depending on whose estimates you believe, that means Rubio needs to find somewhere between $4 trillion and $12 trillion in offsets over the next 10 years just to pay for his tax plan.

Any analysis of the distributional consequences of Rubio's plan needs to somehow figure out what Rubio cuts. If he gives people making $15,000 a $250 tax cut but takes their Medicaid and food stamps and housing subsidies in return, they're going to end up worse off.

"If the financing plan goes after transfer programs or children’s programs, the net effect is likely to be much more regressive than the tax cuts," says Bill Gale, co-director of the Tax Policy Center.

But Rubio hasn't breathed a word of what he'll cut to pay for his plan. So all the analyses right now are essentially assuming this is fun, free money Rubio is handing out — which it isn't. The plan will "require draconian cuts to essential public services" to pay for itself, wrote Bob McIntyre, head of Citizens for Tax Justice.

Past efforts to model smaller tax cuts tended to find sharply regressive outcomes once financing was included. Gale, alongside Peter Orszag and Isaac Shapiro, looked at the distributional implications of paying for the Bush tax cuts through either spending cuts or a mix of spending cuts and tax increases. Once financing was measured, the tax cuts were only "net tax cuts for about 20-25 percent of households" — they were "net tax increases or benefit reductions for the remaining 75-80 percent of the population."

This is an important point, and it needs to be said again and again: Whether tax cuts are progressive or regressive, or whether they're even tax cuts at all, depends on how they're paid for.

Someone will have to pay the cost of these tax cuts, either now or later. Without knowing who that someone is, and what form her payment will take, it's impossible to say who is being helped, or who is being hurt, by Rubio's plan.

What we do know is that Rubio's tax cuts are huge, and paying for them would require spending cuts or tax changes that dwarf anything we've seen in recent American history. "We were all struck when George W. Bush had his $1.6 trillion tax cuts," says Bob Greenstein, president of the Center on Budget and Policy Priorities. "And Bush was proposing them when we had surpluses!"

Take a midway point on the cost of Rubio's plan — $8 trillion. That's a huge amount of money to find. To give a sense of scale, all federal spending on Medicaid over the next 10 years is projected to be about $4.4 trillion. Add in all of Obamacare's tax credits, and you're only at about $5.3 trillion. So you could wipe out all spending on Medicaid and Obamacare — hell, you could also cancel all food stamps for good measure — and you still won't have fully paid for Rubio's tax cuts.

Most government spending is progressive. As for the spending that isn't progressive, well, there's no evidence that Rubio wants to cut it — we know he opposes defense cuts, for instance. So it's hard, or maybe even impossible, to see how he'd pay for his tax plan without making it much, much more regressive than it already is.

Of course, if Rubio has a way of paying for his tax plan that doesn't badly hurt the poor, he could just release it and prove his skeptics wrong.

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