Comments on: Muddled Mitt from MA: Trying to Make Sense Out Of Gov Romney’s Tax Plan

By: Jeff Goodrich

Jeff Goodrich — Wed, 10 Oct 2012 09:11:34 +0000

From the comments it is clear that Romney is not qualified to be President. An essential qualification is telling voters CLEARLY what you plan to do to them before they are asked to vote for you. With a different interpretation by almost every commenter above, Romney has yet to pass that fundamental test.

And no, it is not sufficient to say that we’ll learn the details after the election, or that we’ll then have time to “debate” the issues, or that nothing Romney says can happen without such debate because Congress would need to act. Unlike Obama, who can’t get anything done without a Republican house approval, Romney, if he wins, will very likely be able to pass anything he wants.

Finally, for those here who think he is really just a moderate in tea party clothes, you will be sadly mistaken. He is out to eliminate the estate tax for people in his class — a $100 billion benefit to his family alone. And his constituency, i.e., all those individuals in the FIRE economy who first captured our regulatory system and then used the Federal Reserve, the tax code and boomer demographics to amass hundreds of billions of dollars of Ponzi “wealth” — fortunes that will ensure their families become permanent oligarchs — will do everything in their power to make this a permanent tax cut to protect those fortunes. It will not be revenue neutral. It will not require the rich to pay the same taxes. It will shift taxes to the 99%, (including the 47%). At the same time, he will borrow the shortfall and give our children the bill, with interest payable to his family because they and other wealthy Americans will own the treasury bonds our government will be forced to issue.

By: Glenn Miller

Glenn Miller — Wed, 10 Oct 2012 08:52:14 +0000

Mr. Bernstein, You don’t site a source for your 1.7T figure. I saw in the AZ Republic an article probably attributed to the AP which I remember cited the TPC
saying that if all of the possible credits and deductions(which the reduction of balance the revenue loss from rate cuts per MR) that those above 200K currently receive were wiped out it would not produce enough revenue to counter balance the income saved from the rate cut side of MR’s plan for those same folks. Thus that class receives a net tax cut which means those below the 200K level would have to make up the difference with higher net taxes in order to maintain revenue neutrality. And I think the point was that there is enough value in cred/ded’s for the sub200k group to over compensate for their reduced rates in the plan with cuts to their tax preferences, and end up with enough revenue to make the whole package revenue neutral. There was a posting of how much the 200K+ group net saved and how much more the average sub200K household would pay. Bottomline: Rich pay less, middle income pay more. Went to the TPC site and couldn’t find article. Help me?

By: Sue

Sue — Wed, 10 Oct 2012 07:28:07 +0000

Yes, I’ve heard him say “revenue neutral,” too, but nowhere on his website does this term appear (at least not that I can see). Is this actually “officially” part of his tax plan, or just another talking point so he can sound like moderate Mitt?

By: David

David — Wed, 10 Oct 2012 07:23:58 +0000

It isn’t just his conflation of tax rates and liability. In the debate he made a statement about how if he doesn’t like his insurance plan he would just change it. But the majority, if not the vast majority receive their insurance from their employer – we can’t just change plans with changing employers.

Someone who has lived their whole life very wealthy cannot understand what it is to work for a living. Yes, Ann Romney worked in the home – that’s a job but she never had to worry about a lay off or the plant closing.

By: Jack Davis

Jack Davis — Wed, 10 Oct 2012 06:37:24 +0000

Of course, Gov R claims he can offset that cost with base broadening: ending tax deductions, closing loopholes, getting rid of preferences that high-income taxpayers currently tap to great effect to lower their tax bills.

In theory, this might work. In reality, it won’t and can’t for political reasons. The money is in the large loopholes/exemptions that go to middle/upper class: Mortgage interest, employer health insurance, charitable deductions,etc.,all of which are politically untouchable.

By: James Wetzler

James Wetzler — Wed, 10 Oct 2012 06:21:44 +0000

I fear you’re not reading Romney’s statement sufficiently carefully. He doesn’t mean that his proposed base broadeners will increase upper income tax liabilities by enough to maintain the existing effective tax rate on these taxpayers (they won’t). He means that he’s planning to use dynamic scoring to assume a sufficiently big increase in the upper income tax base beyond the statutory base broadening so that there is no cut in the amount of tax paid by the upper income taxpayers, despite the reduction in their nominal and effective tax rates.

By: Widgetmaker

Widgetmaker — Wed, 10 Oct 2012 05:36:40 +0000

I often wonder what those deductions, preferences, and loopholes are supposed to be. I’ve prepared income taxes for over 20 years and am familiar with the code. The basic formula is simple.

Step 1 – Add up all income (wages, interest, dividends, capital gains, pensions & annuities, net business, net rental, and other miscellaneous income -nothing much to manipulate here.

Step 2 – Deduct medical expenses above 7.5% of AGI, state and local income taxes, property taxes, mortgage interest, investment interest, charitable contributions, and work and investment related expenses above 2% of AGI, and personal exemptions ($3700 for yourself and each dependent). These are the majority of deductions that individuals claim. This arrives at taxable income.

Step 3 – Calculate the tax on taxable income.

So the plan is to eliminate deductions in order to increase taxable income. The lower rates applied to the revised taxable income is supposed to generate the same amount of tax revenue. There is really not a whole lot there. And try to get this by the real estate and charitable lobbies.

By: Widgetmaker

Widgetmaker — Wed, 10 Oct 2012 05:24:03 +0000

What does he mean by “base broadening”. I wish someone would explore that – it seems like another piece of jargon thrown out there to obscure what he wants to do. To me, “base broadening” means that the base (i.e. low income voters who pay very little or no taxes) will have have more of their income taxed to make up for the reduction in taxes collected from those at the top. So a tax cut for the wealthy will be balanced on the backs of the poor “lucky duckies” who are least able to afford it.

Another issue – if the plan is revenue neutral (i.e. everyone still roughly pays the same), then what is the point? Why scrap what we have now and are already familiar with for such a big unknown? If everyone’s net after tax income hasn’t changed, then why bother going through all that change? As Ryan above commented, won’t this introduce one helluva lotta “job killing uncertainty” into the mix?. I believe Romney knows this translates into a huge tax cut for the wealthy and is trying to slip one by us.

I’m in favor of incremental change. Scrap the AMT and eliminate deductions in order to pay for it.

By: Whammer

Whammer — Wed, 10 Oct 2012 04:29:16 +0000

Thanks for that reminder. Essentially, then, the Romney plan reinstates the AMT with a different wrapper. That would have the benefit of making me swear less at Turbotax when it comes time to doing my taxes . But I think the outcome is the same. The higher your income, the less impact the deductions have on your overall tax burden. So capping the deductions doesn’t matter much. Where it will matter is with people who are high earners, but not “very high” — in the $200K to $500K range or so. They, on average, are likely to have relatively high mortgage deductions, property tax and state income tax deductions — especially in CA, NY, MA.

Lower tax rates will disproportionately benefit the very high earners.

By: Redwood Rhiadra

Redwood Rhiadra — Wed, 10 Oct 2012 04:18:42 +0000

The problem is that he’s also always said “revenue neutral” – which means no drop in revenue.