Our View: Romney’s Tax Plan Is ‘Mathematically Impossible’

Photo courtesy of Austen Hufford

Of course the problem with “whatever is true” is figuring out what’s true, particularly when it conflicts with “whatever you’d like to be true” or “whatever feels true.”

Mitt Romney, the presumptive Republican presidential nominee, would like voters to believe that he can cut everyone’s marginal tax rates by 20 percent without increasing the deficit or further reducing the taxes paid by the wealthiest 1 percent of households, thus making it look like a giveaway to people like him.

He professes to believe this is true, but it’s the only part of his “bold, conservative” plan for tax reform that he has released. Without further details — like which programs he’d cut or what loopholes he’d eliminate — it’s impossible to test conclusively the truth of Romney’s claims.

Nevertheless, the Tax Policy Center of the Urban Institute and the Brookings Institution last week gave it a try in a paper with the mind-numbing title of “On the Distributional Effects of Base-broadening Income Tax Reform.”

The TPC gave Romney’s plan the benefit of every doubt, with generous assumptions about economic conditions, tax progressivity, bias on behalf of programs that incentivize savings and investment and the growth that the program would inspire.

Nothing worked. No matter how the economists massaged the numbers, the middle class still would wind up getting socked with a tax increase. The richest of the rich are so rich that if they get the same 20 percent cut in their marginal rate that everyone else does, the 1 percent still comes out way ahead. You can’t eliminate enough deductions and loopholes to make up for it.

That means you have to make deeper cuts in the “tax expenditures” (deductions) that broadly benefit the middle class — things like the home mortgage interest deduction and deductibility of employer-provided health insurance.

If you factor in other promises that Romney has made, such as not cutting defense spending or Social Security and Medicare benefits for today’s senior citizens or about-to-be senior citizens, things get even worse. You have to take out the earned-income credit, the centerpiece of President Ronald Reagan‘s “up-by-the-bootstraps” tax policies. You have to whack the child tax credit, which the poor and middle-class alike depend on.

Bottom line: Those with taxable incomes of more than $1 million would get a tax cut of 8.3 percent, an average of $175,000. Families with taxable incomes of between $75,000 and $100,000 would get a 2.4 percent tax cut, an average of $1,800. Meanwhile, the 45 percent of taxpayers who earn $30,000 a year or less would see their taxes go up an average of $130 a year.

The study concludes that even under the most generous assumptions, “it is not mathematically possible to design a revenue-neutral plan that preserves current incentives for savings and investment and that does not result in a net tax cut for high-income taxpayers and a net tax increase for lower and/or middle-income taxpayers.”

“Not mathematically possible” does not admit much argument.

If Romney is even half the businessman he claims to be, he knows that what he says is not true. That he says it anyway is the bigger problem.

REPUBLISHED FROM THE ST. LOUIS POST-DISPATCH

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Chuck Briese, Oak Ridge Now

[avatar user="cbriese" size="thumbnail" align="left"] Chuck Briese has been a resident of South Montgomery County since 1988. He and his lovely and patient wife, Leslie, have six sons, with only one left to finish high school. Chuck has been a Cub Scout leader, a Little League baseball coach, a church youth leader, and a general troublemaker over the course of the past 25 years. He is obsessed with his lawn, and likes restaurants that serve food that fills up the plate. He has a tendency to tilt at windmills, which may explain why he started Oak Ridge Now.

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