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Romney's tax plan

Romney's tax plan has never been spelled out completely. It starts with a 20% across the board cut for everyone. That is where Obama gets the $5 trillion revenue loss figure, but Romney says he will make the cuts revenue neutral by eliminating deductions, refusing to specify which.

That's where the problem lies. Some taxpayers have a lot of deductions and might see an increase in their taxes, while others with few deductions would get a large tax cut. It might average out, but you don't want to be on the wrong side of that averaging.

What's missing from the discussion is that any tax plan will have to be passed by Congress. Many deductions are aimed at certain businesses. The housing and real estate lobbies will argue fiercely against eliminating the deduction for home mortgage interest and that is a big one—for many taxpayers, their largest deduction. State and local income taxes are a big deduction in some states, but not in others. Where income tax is high the Congressional delegations from those states will vote against eliminating the deduction and Romney may not get the support of his party on that one.

Voters may well go for the 20% income tax cut, not realizing what they could lose in deductions. As long as Romney refuses to tell, he may win votes. The clincher is that the Tax Policy Center claims that no combination of eliminated deductions adds up to enough to allow a 20% tax cut. Analysts who disagree rely on a large increase in economic growth to offset the shortfall.

Replies to This Discussion

Permalink Reply by AgeOfAtheists14 on October 8, 2012 at 9:30am

yeah but they're obsolete and they know it... @ least their so called programs are
http://www.miamiherald.com/2012/10/08/3040098/proposed-amendment-st...

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Permalink Reply by Grinning Cat on October 17, 2012 at 1:55am

There's a new site addressing Romney's tax plan. (It's paid for by the DNC.)

www.romneytaxplan.com

(Go ahead, click for the details.)

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Permalink Reply by Dr. Allan H. Clark on October 17, 2012 at 10:48am

That is hilarious!

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Permalink Reply by Daniel W on October 18, 2012 at 9:20am

ditto.

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Permalink Reply by A. Noni Moose on October 17, 2012 at 10:55am

Seems a bit odd to me that all of the people grilling Romney on the specifics of his plans never cared that Obama had no specifics or experience when he won in 2008. Can Romney spell out specifics? Doubt it. He will not know the whole story until he gets in office. No one from outside can know all of the inner workings of DC until they are submerged in it. BUT, I'd trust a successful businessman to right the ship more than a community agitator with no experience in anything but a classroom. Theorists can come up with magnificent plans on paper, but when you add people to the mix things change. Communism sounds good on paper, but when you add people it breaks down. People have attitudes, personalities, etc. that make the idea a loser.

Seems like to me that if your taxes are cut 20% you don't really need a lot of deductions..correct? Also, why are we all thinking about the "lost revenue"..it's our money, not theirs. They need to make it work with less money in the government coffers. CUT SPENDING!! We are required to tighten our belts and make our household budgets work on the money we earn..We cannot simply get more money to cover all we want. If the checkbook ledger says "$0", you STOP writing checks.

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Permalink Reply by Dr. Allan H. Clark on October 17, 2012 at 11:14am

Every election has its own themes depending on what is going on.

The 2008 election came just a month after the financial crisis hit. The Bush administration had abandoned all its free market principles out of fear the financial system would collapse. There was no incumbent running.

Both McCain and Obama had specific economic platforms. Both were incremental, neither was revolutionary, but they were specific. McCain's big item was doing away with the Alternative Minimum Tax, Obama's was a windfall profits tax on oil. Both promised specific—but narrow—reductions in taxes.

Romney on the other hand has a proposal that would make enormous changes in the tax code by restructuring taxes—reducing rates by 20% and making up the revenue by eliminating deductions. The numbers are available to compute how well it works if he can provide specifics.

Because the GOP has emphasized the need to reduce the deficit, it is important to know specifics—whether he would eliminate the deductions for mortgage interest, state income taxes and local property taxes. If his plan is not revenue neutral—as many economists believe—it will add to the deficit.

If Romney's plan is truly revenue neutral, some people will pay more and others less. We need to know those details.

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Permalink Reply by Daniel W on October 18, 2012 at 9:23am

Thank you for clarifying.

It makes sense that to be neutral, the +++ needs to be balanced by the ---. That's the only way you can get zero sum. Unless there's a place where a miracle happens.

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Permalink Reply by Steph S. on October 17, 2012 at 10:49pm

Booklover - thanks - I love you way you said that. Very cool.

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Permalink Reply by Steph S. on October 18, 2012 at 11:56am

You are just great booklover! : )

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Permalink Reply by Daniel W on October 18, 2012 at 2:32pm

Swear more. Please.

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Permalink Reply by Steph S. on October 17, 2012 at 10:50pm

Yeah it's fantasy Jonathan

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Permalink Reply by Dr. Allan H. Clark on October 18, 2012 at 10:39am

The Tax Policy Center has published a new table showing the effects of capping deductions at either $17,000, $25,000, or $50,000 or eliminating them completely. None of these options provide enough revenue to make up for a 20% cut in rates. It's not even close.

http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3590