Mitt Romney, knowing full well that the President is going to challenge him on his “facts” in their first face-to-face debate, which is scheduled to take place in three weeks, is going on the offensive, attempting to claim the mantle of truth-teller. In an interview a few days ago with George Stephanopoulos, Romney said that he expects that Obama will lie. “I think the challenge that I’ll have in the debate is that the president tends to, how shall I say it, to say things that aren’t true,” said Romney. Stephanopoulos, to his credit, kept things fair and balanced, and didn’t mention any of the several dozen lies that Romney has told since winning his party’s nomination. (Not wanting to be seen as a practitioner of “gotcha” journalism, Stephanopoulos has shrewdly made a decision to eschew journalism altogether.) But, the facts are catching up to Romney. Even conservatives, for instance, are beginning to question the honesty of his tax proposal, which I’m sure will figure prominently in that first debate. The following comes Albert R. Hunt, the executive editor of the decidedly pro-business Bloomberg News.
…(Romney) has proposed a tax cut of more than $4 trillion over 10 years, an across-the-board 20 percent reduction in individual income-tax rates, the elimination of the estate tax, the alternative minimum tax and taxes on capital gains, dividends and interest for those earning less than $200,000. The corporate rate tax rate would come down to 25 percent from 35 percent.
He insists this can be achieved without raising revenue, by limiting tax preferences. He refuses to specify any. The candidate cites Republican experts such as the Princeton University economist Harvey Rosen. However, Rosen says this is feasible if Romney eliminates the popular tax deductions for items such as home mortgages and charitable contributions for those making more than $100,000 a year.
That’s a nonstarter for many Republicans, even with the trade-off of lower rates.
Thus, most tax experts say the Romney plan is a mirage.
“You can’t get enough base-broadening to finance his rate reductions,” says Michael Graetz, a Columbia Law School professor who was a top tax official in President George H.W. Bush’s Treasury Department. “Romney says what he will do on tax cuts but he’s not prepared to say what he would do on the hard stuff.”
…Promises for a revenue-neutral plan in which the middle class and small businesses get a net tax cut suggest higher overall taxes for either the poor or the rich. The Romney campaign refuses to comment.
Romney’s tax problem is further compounded when he insists his plan wouldn’t change the progressivity of the tax code. He cites Ronald Reagan’s 1986 tax-reform bill and the recommendations of the 2010 Bowles-Simpson deficit-reduction panel as models for cutting tax rates and broadening the base in a non-regressive manner.
What Romney doesn’t say is how this was achieved. Capital gains taxes were increased and treated as ordinary income in both the 1986 Tax Reform Act and the Bowles-Simpson plan. Romney has ruled out any increase of those levies…
But, if Obama says as much during the debate, we know that he’ll just by lying, right?
The Washington Post editorial board also took aim at the Romney tax plan today. Here’s what they had to say.
For several weeks, we’ve been asking Republican presidential nominee Mitt Romney to explain how he can cut taxes, as promised, without adding to the nation’s debt, as also promised. Now he’s effectively let the cat out of the bag: He can’t.
Mr. Romney’s tax plan calls for reducing income tax rates by 20 percent. The top bracket would go from 35 percent to 28 percent. He has said that he can do this in a revenue-neutral way by eliminating loopholes. While the rich might pay more, he has said, the middle class would pay less.
There are a couple of pitfalls here. The first is that while closing loopholes sounds good — Make those oil companies pay! — the costliest ones are cherished by most Americans. These are tax provisions that promote home ownership, charitable giving, and employer-provided health care and that allow taxpayers to deduct their state and local income taxes. Limiting or eliminating these popular “loopholes” would be extremely difficult.
The second obstacle, as shown by the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute, is that Mr. Romney’s plan is mathematically impossible, even if it were politically feasible. Take away every deduction from every wealthy household, the center calculated, and you still couldn’t make up the revenue the government would lose by reducing rates without raising taxes on middle-class households.
Not so, Mr. Romney protested recently, and cited an analysis by Harvard economist Martin Feldstein, a Romney campaign adviser. Mr. Feldstein said the math could work — if you took away every deduction from every household earning $100,000 or more. (Even then, he couldn’t pay for the estate tax abolition that Mr. Romney also favors, but never mind.) Is that what Mr. Romney has in mind, we asked? If not, what is his plan?
On Friday, ABC’s George Stephanopoulos put the question to the candidate. “No, middle income is $200,000 to $250,000 and less,” Mr. Romney replied.
But then, the Harvard study shows, the math can’t work. His answer? “The biggest source of getting the country to a balanced budget is not by raising taxes or by cutting spending,” he said. “It’s by encouraging the growth of the economy.”
In other words, we are back to counting on magic — to “dynamic scoring,” the voodoo economics of the Reagan era, the wishful thinking of President George W. Bush’s 2001 and 2003 tax cuts that helped turn a surplus into the deficit now weighing the nation’s economy. Cut taxes and hope the economy grows faster than predicted.
At a time when the nation is already on course to build up a debt so large that interest payments alone will begin to drown us, Mr. Romney wants to reduce taxes further, with — it now appears — no plan to make up the difference. It almost takes your breath away.
So, what does all of this mean? It means that Romney’s plan could work, but only if he eliminated all, or most, deductions and credits for households with incomes over $100,000. That means getting rid of mortgage interest deductions, charitable contribution deductions, etc. At least that’s what the LA Times is reporting today. Here’s a clip.
Mitt Romney’s budget plan would significantly raise income taxes for many families making between $100,000 and $200,000, analyses by leading Republican economists cited by the Romney campaign show….
For many wealthier taxpayers, lower tax rates would outweigh the loss of deductions. An analysis by the Tax Policy Center earlier this summer estimated that taxpayers with annual income of $1 million or more would gain more than twice as much from lower rates as they would lose by eliminating deductions. Taxpayers earning between $200,000 and $1 million also would benefit, although the margin would be less lopsided. The ratio flips for households earning below $200,000…
So, here’s the big take-away… If you make less than $200,000 a year, prepare to be fucked, my friends.
