Posted by Sir Four at 10:54am Aug 3 '12The nonpartisan Tax Policy Center tried to make sense of Romney's various tax promises. Romney wants to cut the tax rates by 20% across the board. He vows his overall plan will be budget-neutral, insomuch as he'll eliminate various tax deductions and increase the tax base by stimulating the economy. He furthermore vows that the rich will not get an effective tax cut, due to the elimination of the tax deductions.
Jonathan Chait discusses the findings of the Tax Policy Center:
Those making over $1 million a year would end up with a $87,000 tax cut. Those earning below $200,000 would get a $500 average tax increase. That's under the scenario most favorable to Romney's claims. Maybe that's why he doesn't want to discuss his tax plan at length, choosing instead to make vague claims (which don't add up)?
Jonathan Chait discusses the findings of the Tax Policy Center:
The amount of revenue available from tax deductions for the rich is smaller than the amount of revenue lost by cutting tax rates for the rich. Even if Romney sincerely scoured the tax code and wiped out every last tax break for the rich that he hasn't promised to preserve (he has promised to keep in place tax incentives for saving, like the capital gains tax break), the rich will pay lower rates and a lower share of the tax burden.
It's worth noting that the study embraces implausibly friendly assumptions as to how Romney would go about this. It assumes he would ruthlessly purge the tax code of breaks for the rich, even highly popular ones like the charitable deduction. It further assumes that, in order to wring every last penny out of the rich, Romney would cut off all deductions immediately for every dollar in income over $200,000 a year. (In reality, nobody would create a tax code that meant going from $200,000 a year to $200,001 would jack up your taxes by thousands of dollars --ÃÂ you would ramp up the tax deduction phase-in, which would reduce taxes for the rich even more. But the paper bends over backwards to grant Romney this implausible assumption.)
What's more, the paper assumes that Romney's plan would increase economic growth, meaning it wouldn't have to find dollar-for-dollar replacements for all its lost income. To measure this cheerful scenario, the paper adopts a model created by Greg Mankiw -- who is, of course, a Bush administration veteran and one of Romney's main economic advisers.
Piling implausibly optimistic assumption upon implausibly optimistic assumption, the paper nonetheless concludes that Romney will cut taxes for the rich. That means it would result in some combination of higher taxes for the middle class or higher deficits. If you take Romney at his word that he would hold tax revenue steady at its current levels, then he would be implementing a significant shift in the tax burden from the rich to the middle class. 95% of all taxpayers would pay more taxes, in order to finance a tax cut for the most affluent.
Those making over $1 million a year would end up with a $87,000 tax cut. Those earning below $200,000 would get a $500 average tax increase. That's under the scenario most favorable to Romney's claims. Maybe that's why he doesn't want to discuss his tax plan at length, choosing instead to make vague claims (which don't add up)?