Now that Rick Santorum is surging in the Iowa GOP caucus polls, I thought it would be a good time to look at his economic plan. He markets it as “Made in America: Empowering American Families, Building Economic Freedom.” Unlike frontrunner Mitt Romney’s 59-point plan, this one has 31 points, many of which are standard Republican fare—repeal Obamcare, cut the corporate tax rate, etc. But there are a few interesting differences:

1. Cut and simplify personal income taxes by cutting the number of tax rates to just two – 10 percent and 28 percent, returning to the Reagan era pro-growth top tax rate. | This suggests the 1986 tax reform act. Certainly slashing that top rate would be pro-growth, especially considering it is currently headed to 40 percent or higher. And I like the idea of creating a “Reagan ceiling” on tax rates. But Santorum’s top rate would be higher than what Rick Perry and Newt Gingrich want, and also higher than the 25 percent rate found in Paul Ryan’s budget plan.

4. Lower the Capital Gains and Dividend tax rates to 12 percent to spur economic growth and investment. | You tax what you don’t want. We want more investment in America. So any move to reduce investment taxes—which are double taxes, really—is a good one. The current rate is 15 percent, headed to 20 percent in 2013. A zero rate would be better, but I’ll certainly take 12 percent to help reduce the tax code’s bias against investment.

5. Reduce taxes for families by tripling the personal deduction for each child. | Santorum here presents a completely different view of tax reform than the one offered by many economists and the recent Bowles-Simpson deficit commission, which is to lower tax rates and eliminate tax deductions in the name of growth and efficiency. This is also how supply-siders view tax reform. Santorum and many conservatives, however, think tax reform should address the ­distortions and burdens the current code imposes on American families. As economist Robert Stein wrote a few years back in National Affairs:

In particular, it is time to rethink how the tax code treats ­parents. Too many free-market economists still consider families an afterthought — ­arguing that the tax code should be “neutral” about raising children, as if parenting were merely one hobby among many. But raising children is hardly just another pastime: It is one of the most important services any American can perform for our country.

Even if we ignore the societal and cultural implications of parenting and consider economic factors alone, no government — especially not a government committed to an entitlement system like ours — can be neutral toward the very existence of future generations of taxpayers. Our nation’s long-term economic prospects are threatened by a declining fertility rate that, if it remains constant, will only barely manage to replace our current population. And even as Social Security and Medicare depend on large numbers of future workers, they have created an enormous fiscal bias against procreation, undermining an important motive for raising children: to safeguard against poverty in old age. …

To correct for this inadequate treatment of households with ­children, the existing dependent exemption for children, the child credit, the ­child-care credit, and the adoption credit should be replaced with one new $4,000 credit per child that can be used to offset both income and payroll taxes. (This amount is set much closer to the $3,250 figure than the $8,500 one mostly to reduce the plan’s negative impact on federal revenue.)

Some economists would justify this sort of pro-natalist policy by saying it allows parents to recapture more of their economic investment in children, which is only fair since they are providing a tremendous benefit to society by birthing, raising, and training its future. And perhaps it would also boost birth rates. (Another suggestion by some economists is reducing the payroll tax on parents depending on how many kids they have.) The politics are smart, too, since the plan would directly impact middle-class families and not just entrepreneurs and business.

6. Reduce and simplify taxes for families by eliminating marriage tax penalties throughout the federal tax code. | Again, more pro-family tax policy by Santorum.

7. Retain deductions for charitable giving, home mortgage interest, healthcare, retirement savings, and children. | Again, Santorum would keep tax breaks targeted at families, especially those that affect charities (including churches) and children. Tax policy as social policy.

9. Eliminate the corporate income tax for manufacturers—from 35 percent to 0 percent—which will spur middle income job creation in the United States and will create a job multiplier effect for workers. | While Santorum would cut the tax in half overall—from 35 percent to 17.5 percent—he would eliminate it for companies that make stuff here in America. In other words, not for banks and not for companies that move their research centers to China and India.

10. Spur innovation in America by increasing the Research & Development Tax Credit from 14 percent to 20 percent and make it permanent. | Many right-of-center economists would prefer just lowering the tax rate and getting rid of these sorts of industrial policy-like tax breaks.

Bottom line: Santorum has one of the most politically and economically cohesive policy plans in the GOP field. He wants to help middle-class families and sees tax policy as a way of directly doing that, beyond trying to boost GDP growth. It’s more populist-conservative in many ways than pure free-market/libertarian, the latter of which seems to more reflect the Tea Party trend in GOP economic policy. Not something a Wall Street or Ivy League economist would cook up, certainly. And supply-side economics is about altering incentives to boost growth (and incomes and jobs), not altering fertility rates to boost human capital or easing the tax burden on families. No matter Santorum’s political fate, his ideas may gain further traction on the right as some policymakers and wonks see the limits of an economic approach geared almost exclusively around lowering marginal tax rates and cutting spending.