Sorry, Jack Roberts, but you're wrong about Mitt Romney's tax plan
By Congressman Earl Blumenauer of Portland, Oregon.
Jack Roberts was right in the title of his recent op-ed, “Romney Tax Plan Exposes Flaws in Our Public Debate,” but not for the reasons he suggested. He argues that those attacking Governor Romney’s tax plan as “not adding up” or that it will “add $5 trillion to our deficit” shows that people are unable to have serious discussions about public policy. In his column, Roberts uses what he believes to simple common-sense to show that even Romney’s tax bill would double under his own plan. Roberts also cites the Simpson-Bowles commission as an example of how we can both cut taxes for everyone and eliminate tax deductions, all while not adding to the deficit, just like Governor Romney has proposed. So why are we getting all worked up, he asks?
First, it should be noted that Simpson-Bowles was a plan, not a study about its effects. And second, Simpson-Bowles was able to theoretically lower overall tax rates while not adding to the deficit because they were willing to increase the capital gains tax rates and make other changes, which Mitt Romney has refused to do.
The day before the Roberts column ran, the nonpartisan Tax Policy Center, a joint undertaking of the Urban Institute and Brookings Institution, did yet another study that demonstrated why eliminating all itemized deductions would only yield about $2 trillion of the $5 trillion necessary to make Governor Romney’s tax plan deficit neutral. Most of the “studies” Governor Romney has cited to prove his plan is deficit neutral aren’t really studies at all, but editorials and opinions long on what-ifs and short on facts.
But if you don’t want to deal with the actual studies instead of Mitt Romney’s dubious claims, you could just examine Jack’s effort at “common sense.” Mr. Roberts rightfully claims that, under the current tax code, Governor Romney only paid 14 percent in taxes on the $21 million he made in 2010 despite income that would otherwise place him in the top 35 percent bracket. Where he goes wrong, however, is arguing that by lowering the top tax rate to 28% and eliminating all tax deductions, credits and loopholes, Governor Romney will voluntarily double his own tax bill. It simply doesn’t work that way. The reason Romney only paid 14% was because of provisions in current tax law that his plan would keep in place. The Romney plan will not double his taxes because he specifically protects the capital gains tax and the perverted application of the “carried interest” exemption that will protect him and the super rich because that’s where they make the majority of their money. When you throw in the elimination of the inheritance tax, which Romney and his Republican allies have called for, the Romney family will actually see taxes on their vast wealth go down. In fact, much of that wealth appreciating in family trusts and accounts will have never been taxed initially, and with the elimination of the estate tax, would escape tax altogether.
The fact that Jack, who is usually thoughtful, would find such a prominent spot to misrepresent the facts and this debate, illustrates the flaw in how we’re managing these issues. Tax and fiscal policy require careful analysis and the ability to determine who the credible sources of are, and then to use them.
His column is exhibit A for why we’re unable to have a serious discussion about tax reform.
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Oct. 22, 2012
Posted in guest column. |
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2:16 p.m.
Oct 22, '12
Thank you for saying this Earl. If Romney and others were serious about cutting rates and offsetting deductions, they would start with the deductions and show how much they could cut rates. Of course it would be much less than 20% and politically unpopular. In addition it wouldn't cut the deficit which is their justification for this trade-off in the first place. Of course the only reason that this would cut the deficit is their religious belief in supply-side economics.
For the life of me I do not understand why the press and much of the public can believe this hogwash after the last decade and the utter failure of this to work for the Bush tax cuts.
3:07 p.m.
Oct 22, '12
Thanks for taking the time to comment on my column, Congressman. I did see the Tax Policy Center's report before I wrote my column but space didn't allow me to respond. They admitted they only evaluated one scenario (basically the disallowance of itemized deductions) in reaching their conclusion.
I don't blame you for picking and choosing which of Romney's statements on taxes you choose to lump together; he has been covering a lot of territory over the past 18 months. Personally, I choose to stick with his statement in the first debate that he wouldn't propose a plan if it added to the deficit.
Personally, I assume both capital gains and dividends will have to be taxed as ordinary income to accomplish what Romney has proposed. That's what the Bowles-Simpson report assumed as well.
At least Romney has given us a starting point for a serious discussion about tax policy. President Obama hasn't. Repealing just 20% of the Bush tax cuts while making 80% of them permanent doesn't qualify in my book, nor does the gimmicky Buffett tax that just affects millionaires.
3:30 p.m.
Oct 22, '12
Here is link to Romney site where he specifically states his position to cut 20% from rates AND maintain low tax rates on Cap gains and dividend.
http://www.mittromney.com/issues/tax
And Ryan wants to do away with all taxes on Cap gains and dividends.
I think we should take him at his word. The one promise I truly believe he will keep is to maintain the special tax rate for Cap gains and dividends.
To argue that one should believe Romneys promise to not have a net cut in taxes because you assume he will break one of his signature promises sounds like you're saying we should trust him to be lying to us, because otherwise his promises are gibberish.
12:14 p.m.
Oct 23, '12
Your assumption of taxing capital gains as ordinary income is nowhere to be found in any of his statements/plans. To the contrary, having to recraft this for Romney in order for it to have a semblance of reality is not how to have a serious discussion of taxation or any other big issue. Capital gains and carried interest has defined Romney’s career and padded the record on which he runs. Omitting it from his "plan" is hardly an oversight. To have meaning, a mandate must be limited to what a candidate runs on, not "stuff I imagine he might have thought of." Under a Romney administration, capital gains rates will not change unless he clearly articulates that goal in the campaign.
11:24 a.m.
Oct 25, '12
Earl, you know better than that ("Under a Romney administration, capital gains rates will not change unless he clearly articulates that goal in the campaign.") In fact, capital gains rates will change automatically unless President Romney and both houses of Congress extend the portion of the Bush tax cuts lowering them from 20% to 15%.
But I am not "assuming" Romney will tax capital gains as ordinary income. I am simply pointing out that this would make it possible to cut taxes rates by 20% without increasing the deficit--which you and other Democrats have been saying is impossible.
1:23 p.m.
Oct 23, '12
Jack - The problem with assuming that capital gains will be taxed as ordinary income in order to make Mr Romney's plan work is that Mr Romney said in the first debate that he said he intends to maintain the current tax rate on capital gains -- meaning that it will be taxed at a lower rate than "ordinary income" -- and he has also said that he will eliminate capital gains for anyone with an income of $200,000 or less.
3:44 p.m.
Oct 22, '12
What Jack can't bring himself to say is that MItt Romney is a dishonest politician who will not be truthful about his real agenda. He won't even reveal his own taxes. He proposes permanent tax breaks to the same wealthy people who are already thriving, tax breaks that will bring devastation to any kind of budget planning, essential services, or governance to our country. And the only thing Romney will do is repeat the same lie that GWB did, that giving more money to rich people produces more growth and revenue. Been there and done that, and it's an abysmal failure. More tax breaks on the credit card, more wars on the credit card. And voucherize Medicare, end Medicaid, cut Soc. Sec. because earned benefits to the middle class are too expensive???
6:03 p.m.
Oct 22, '12
Excellent retort Congressman Blumenauer.
In the most simple of terms, what continues to fail, is the notion that continued tax breaks for the wealthiest Americans, has yet to strengthen an economy or create stable family wage jobs.
Trickle down has never worked. The Republicans have just done a heck of a job, multiple times in the past several decades, of increasing the national debt while providing those tax cuts. This time, they left Obama with an enormous bill to pay, and now blame him for debt that rose because they put us into a near depression.
A progressive tax system that adequately addresses all forms of income, while providing a fair ceiling for those barely earning enough to survive is quite easy to come up with. It's convincing the most selfish of Americans that they must shoulder their fair share of the burden that becomes the stopping point to real tax reform.
Leviticus 23:22 When you reap the harvest of your land, do not reap to the very edges of your field or gather the gleanings of your harvest. Leave them for the poor and the alien.
Pretty much says it all.
5:01 p.m.
Oct 23, '12
I just don't believe the fundamental problem of the US economy is that rich people don't have enough money. Tax 'em or don't, it won't make much difference.