Romney's tax plan in slow motion
I think the mistake is talking about Romney's tax proposals in short handed jargon. It seems to me that when you slow it down, Mitt Romney's tax plan more or less looks like this --
1. When signed into law the tax RATES of every taxpayer cut by 20% Wealthy and average Americans alike (is this on top of Bush tax cuts or instead of Bush tax cuts?)
2. When signed into law, various unnamed loopholes and deductions are closed. No sense of what those are. Democrats say it will be the mortgage interest deduction. On Sunday, on This Week Ed Gillespie said deductions and loopholes will be those that "upper-income families" obtain. Romney will protect "middle-class families" I remember when you could deduct the interest on your credit card debt - and I remember that deduction being closed. However, somehow Mitt can still deduct the expenses related to his Olympic horse. But Reagan's budget director, said: "Of the $1 trillion in so-called tax expenditures that the plan would attack, the vast majority would come from slashing popular tax breaks for employer-provided health insurance, mortgage interest, 401(k) accounts, state and local taxes, charitable giving and the like, not to mention low rates on capital gains and dividends."
3. Question: How do we pay for Romney's tax cut?? (how do we raise revenue equal to the amount of taxes we won't collect because of the 20% rate cut across the board) Romney's answer: through closing these loopholes and deductions and through "economic growth" Notion that if the economy is doing really really well - then there will be more revenue to tax, and the net result will be more taxes. But how much growth is needed to fund the cut to the tax rate?
4. Question: Suppose the level of "economic growth" doesn't happen, suppose the closed loopholes and deductions alone do not make up for the cost of the tax cuts, will Romney pare back the tax cuts? George Stephanlous tried to flush this out on This Week and the republicans answered with mumbo jumbo -- George Stephanopoulus asked again, and more mumbo jumbo. Likely answer - of course not!!
5. Republicans keep saying Reagan did the same thing (with the help of Tip O'Neill). But Reagan's budget director, David Stockman slammed the Romney/Ryan plan in his op-ed (link below. Bruce Bartlett (Reagan and George H. W. Bush administrations) "challenged GOP opposition to allow tax rates at the top brackets to return to where they were (39.6 percent) before the George W. Bush tax cuts. Bartlett reminds us that the economy grew robustly under the higher Clinton-era tax rates, and the federal government ran surpluses."
6. Romney says his tax cuts will be revenue neutral - but how does he know that? He will cut the tax rate long before he knows the costs. The "revenue neutral" piece will be based on projections only.
Critically important to keep making case: tax rates will be slashed now, but we won't know until later whether it worked or not - because we may not see the needed economic growth at the rate required to pay for the cuts. Additionally, the loopholes and deductions will be closed now - and saying that we will leave it up to Congress to decide the loopholes and deductions later means that the middle class is going to wind up paying more in taxes.
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http://abcnews.go.com/Politics/week-transcript-robert-gibbs-ed-gillespie-bill-oreilly/story?id=17414106 (Transcript)
http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/16/reagan-era-conservatives-reject-economics-of-todays-gop (great piece and links through to Stockman's NYT op-ed)
