Romney Tax Plan on Table. Debt Collapses Table.

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http://www.bloomberg.com/news/print...lan-on-table-debt-collapses-table-.html#print

Romney Tax Plan on Table. Debt Collapses Table.

By Ezra Klein -

Aug 2, 2012

I can describe Mitt Romney’s tax

policy promises in two words: mathematically impossible.

Those aren’t my words. They’re the words of the nonpartisan

Tax Policy Center, which has conducted the most comprehensive

analysis to date of Romney’s tax plan and which bent over

backward to make his promises add up. They’re perhaps the two

most important words that have been written during this U.S.

presidential election.

If you were to distill the presumptive Republican nominee’s

campaign to a few sentences, you could hardly do better than

this statement of purpose from the speech Romney delivered in

Detroit, outlining his plan for the economy: “I believe the

American people are ready for real leadership. I believe they

deserve a bold, conservative plan for reform and economic

growth. Unlike President Obama, I actually have one -- and I’m

not afraid to put it on the table.”

The truth is that Romney is afraid to put his plan on the

table. He has promised to reduce the deficit, but refused to

identify the spending he would cut. He has promised to reform

the tax code, but refused to identify the deductions and

loopholes he would eliminate. The only thing he has put on the

table is dessert: a promise to cut marginal tax rates by 20

percent across the board and to do so without raising the

deficit or reducing the taxes paid by the top 1 percent.

The Tax Policy Center took Romney at his word. They also

did what he hasn’t done: They put his plan on the table.

Favorable Conditions

To help Romney, the center did so under the most favorable

conditions, which also happen to be wildly unrealistic. The

analysts assumed that any cuts to deductions or loopholes would

begin with top earners, and that no one earning less than

$200,000 would have their deductions reduced until all those

earning more than $200,000 had lost all of their deductions and

tax preferences first. They assumed, as Romney has promised,

that the reforms would spare the portions of the tax code that

privilege saving and investment. They even ran a simulation in

which they used a model developed, in part, by Greg Mankiw, one

of Romney’s economic advisers, that posits “implausibly large

growth effects” from tax cuts.

The numbers never worked out. No matter how hard the Tax

Policy Center labored to make Romney’s promises add up, every

simulation ended the same way: with a tax increase on the middle

class. The tax cuts Romney is offering to the rich are simply

larger than the size of the (non-investment) deductions and

loopholes that exist for the rich. That’s why it’s

“mathematically impossible” for Romney’s plan to produce

anything but a tax increase on the middle class.

The Romney campaign offered two responses to the Tax Policy

Center’s analysis, one more misleading than the other.

First, the campaign called the analysis “just another

biased study from a former Obama staffer.” That jab refers to

Adam Looney, one of the study’s three co-authors, who served in

a staff role on the White House Council of Economic Advisers

under President Barack Obama. But the Tax Policy Center is

directed by Donald Marron, who was one of the principals on

George W. Bush’s Council of Economic Advisers. Calling the Tax

Policy Center biased simply isn’t credible -- a point

underscored by the fact that the Romney campaign referred to the

group’s work as “objective, third-party analysis” during the

primary campaign.

Then the Romney campaign said, “The study ignores the

positive benefits to economic growth from both the corporate tax

plan and the deficit reduction called for in the Romney plan.”

There’s a reason the study ignores those “positive benefits”:

Romney has called for a revenue-neutral corporate tax plan that

brings the rate down from 35 percent to 25 percent while also

promising to balance the budget. He has not said how he will

achieve either goal. Until he does, those positive benefits --

if they exist -- are impossible to calculate.

Regressive Cuts

If Romney tries to pay for his tax cuts by reducing

spending, the results, as the Tax Policy Center notes, would be

even more regressive. Romney has promised to increase defense

spending and hold benefits steady for the current generation of

seniors. The only remaining big spending programs are those that

help the poor; that’s where Romney’s cuts would have to be

concentrated. Paying for tax cuts for the rich by curtailing

programs for the poor is even more of a reverse-Robin Hood act

than paying for tax cuts for the rich by cutting the tax

expenditures (deductions and the like) of the middle class.

The Center on Budget and Policy Priorities produced its own

analysis of Romney’s plan, based on an assumption that Romney

pays for half of his tax cuts through spending cuts. The

conclusion: By 2022, Romney would need to cut all non-defense,

non-Social Security programs by 49 percent. That is not

plausible, to say the least.

The Romney campaign has not provided good answers to the

questions raised by its own math. But we already knew the Romney

campaign didn’t have good answers. If Romney had good answers,

he would have made good on his rhetoric and put his plans on the

table.

It would be great if Romney could fulfill his promise to

cut taxes by trillions of dollars, increase defense spending,

keep entitlement spending on pretty much its current path for

the next decade, and balance the budget. But as Tyler Cowen, the

George Mason University economist, put it in a pithy tweet

(though perhaps “pithy tweet” is a tautology), “The proposed

Romney fiscal policy just doesn’t make any sense.”

This is not a surprise. Even some Republican policy experts

admit in private that Romney’s promises simply don’t add up. To

twist Abraham Lincoln’s famous formulation, the Romney campaign

has decided it’s better to remain silent and be thought evasive

than to reveal your plan and remove all doubt that you’re

cutting taxes on the rich while increasing the deficit, raising

taxes on the middle class and cutting programs for the poor.

Unfortunately for the Romney campaign, the Tax Policy

Center’s analysis has removed all doubt. Romney needs to come up

with a way to make his promises mathematically possible -- and

quick.
 
They don't have his ACTUAL plan. They are going off of a model of a plan by one of his advisors.

Still a good read but it didn't say anywhere that this was his actual plan that he himself has laid out on the table.
 
Pretty sure HE doesn't have an actual plan. It's Romney. They are going off what he has said. It may not be what he will actually do, but he's still responsible for his words.
 
Well I'll agree with you there. I'm sure he has a bunch of different plans and they need to look through them and really run numbers 1000 times and try to perfect it. Unfortunately if he were to give an unfinished plan then, A: he would be criticized for not having a complete plan and B: people would criticize this plan just because thats what people do best.

Either way I think when he does release his plan, it better be FLAWLESS. Maybe not flawless to the different parties, but flawless like no stupid mistakes and it better make sense what hes gonna do.

Just my 2 cents.

Hopefully Romney can deliver a good plan, that would be awesome, but we'll ahve to wait and see what his official plan is before we make any solid judgements about it.
 
He wants to cut taxes 20% across-the-board, And Other than canceling pbs he's given no other way to save money. The only way I can see someone to start cutting 20% across the Board In a way that would make most people happy. would be to cut military spending. But he's not going to do that. he's just getting keep spending more money on the military, And therefore he's full of shit. Also if were less than a month away from the election and he still hasn't released his plan he's not going to before he Becomes president.
 
Ya hes def not gonna cut military spending. He says hes gonna cut 20% and me , like you and everyone else doesnt know how this is supposed to happen or if it can even happen in a rwasonsble way. Ibwant to see his plan before i go calling him out too harshly though. But the question is, when/will he release this plan?
 
He should cut military spending! All those soldiers not paying income tax, its disgusting!Yeah......serving US soldiers are in the 47%, fuck Romney.

Also the US's military spending is ridiculous, and if he really is serious about cutting the deficit, he will cut the military.
 


This is what happens when Ryan tries to explain his plan....Math is a bitch, ain't it?

/images/flash_video_placeholder.pngHere is specifically what the Tax Policy Center says:

The Romney Plan (Updated)

In his campaign for the Republican presidential nomination, Mitt Romney has proposed permanently extending the 2001-03 tax cuts, further cutting individual income tax rates, broadening the tax base by reducing tax preferences, eliminating taxation of investment income of most individual taxpayers, reducing the corporate income tax, eliminating the estate tax, and repealing the alternative minimum tax (AMT) and the taxes enacted in 2010’s health reform legislation. The Tax Policy Center (TPC) has completed a preliminary analysis of the Romney plan, based on information posted on the campaign website and email exchanges with campaign policy advisors. Because we have received no details on proposals to reduce tax preferences, the TPC analysis does not include those proposals.1

View this page as a PDF Summary tables are available here

Description of Plan



Governor Romney would permanently extend all the 2001 and 2003 tax cuts now scheduled to expire in 2013, repeal the AMT and certain tax provisions in the 2010 health reform legislation, and cut individual income tax rates by an additional 20 percent. He would also expand the tax base by cutting back tax preferences, but has supplied no information on which preferences would be reduced. Tax provisions in the 2009 stimulus act and subsequently extended through 2012 would expire. These include the American Opportunity tax credit for higher education, the expanded refundability of the child credit, and the expansion of the earned income tax credit (EITC). The plan would also eliminate tax on long-term capital gains, dividends, and interest income for married couples filing jointly with income under $200,000 ($100,000 for single filers and $150,000 for heads of household) and repeal the federal estate tax, while continuing the gift tax with a maximum tax rate of 35 percent.2

The plan would reduce the six current income tax rates by one-fifth, bringing the top rate down from 35 percent to 28 percent and the bottom rate from 10 percent to 8 percent. The accompanying repeal of the AMT would increase the tax savings from the rate cuts—without that repeal, the AMT would reclaim much of the tax savings.

The plan would recoup the revenue loss caused by those changes by reducing or eliminating unspecified tax breaks, thereby making more income subject to tax. Gov. Romney says that the reductions in tax breaks, in combination with moderately faster economic growth brought about by lower tax rates, will make the individual income tax changes revenue neutral compared with simply extending the 2001 and 2003 tax cuts. He also promises that low- and middle-income households will pay no larger shares of federal taxes than they do now.

At the corporate level, the Romney plan would make two major changes: 1) reduce the corporate income tax rate from 35 to 25 percent and 2) make the research and experimentation credit permanent, It would also extend for one year the full expensing of capital expenditures and allow a “tax holiday” for the repatriation of corporate profits held overseas. The plan does not specify, however, whether repatriated earnings would face any tax and, if so, at what rate. In the longer run, Gov. Romney would reduce the corporate rate further in conjunction with base broadening and simplification and would move the corporate tax to a territorial system.

Gov. Romney would also permanently repeal the 0.9 percent tax on wages and the 3.8 percent tax on investment income of high-income individual taxpayers that were imposed by the 2010 health reform legislation and are scheduled to take effect in 2013.

Because Gov. Romney has not specified how he would increase the tax base, it is impossible to determine how the plan would affect federal tax revenues or the distribution of the tax burden. TPC has analyzed instead the effects of the specified proposals in the Romney plan. These estimates provide a guide as to how much the base broadening would need to raise taxes in different income groups to achieve the plan’s targets.

TPC’s analysis measures the change in tax liabilities against two alternative baselines: current law, which assumes that the 2001-10 tax cuts all expire in 2013 as scheduled, and current policy, which assumes that the 2011 law is permanent (except for the one-year payroll tax cut and temporary investment incentives).3 Compared with the current law baseline, the Romney plan (absent base broadening) would cut taxes for about three-fourths of taxpayers by an average of more than $7,000. In contrast, compared with current policy, about 11 percent of tax units would see their 2015 taxes go up an average of nearly $900 while 70 percent would get tax cuts averaging almost $4,300. The tax increases reflect the expiration of three provisions enacted in 2009: the American Opportunity Tax Credit and the expansion of the earned income credit and the child credit.

Also in the absence of such base broadening, TPC estimates that on a static basis, the Romney plan would lower federal tax liability by about $900 billion in calendar year 2015 compared with current law, roughly a 24 percent cut in total projected revenue. Relative to a current policy baseline, the reduction in liability would be about $480 billion in calendar year 2015.

Sources

Tax: Fairer, Flatter, and Simpler

Appendix: Detailed List of Assumptions Underlying Analysis

Based on the campaign's summary and Gov. Romney’s statements, TPC assumes that the 2001-03 tax cuts become permanent but that temporary tax cuts enacted in 2009 and 2010 are allowed to expire. Provisions that are permanently extended include marriage penalty relief, the 0 percent and15 percent tax rates on long-term capital gains and qualified dividends, and the higher amounts and increased refundability of the earned income tax credit and child tax credit enacted in 2001. The American Opportunity tax credit would expire and be replaced by the permanent Hope tax credit for higher education. The temporary reduction in the phase-in threshold for refundability of the child credit and the increase in the EITC for larger families enacted in 2009 would also expire in 2013 as scheduled.

Individual income tax rates decline by 20 percent, as shown:

Current Rate 10%

15%

25%

28%

33% 35%

New Rate 8%

12%

20%

22.4%

26.4% 28%

Of particular importance are details of applying the exemption of investment income (long-term capital gains, dividends, and interest income) for most taxpayers with income less than threshold amounts ($200,000 for married couples, $100,000 for single returns and $150,000 for heads of households). We assume that all other income is counted first in determining whether investment income is subject to tax. Therefore, for any married couple with income from other sources above $200,000, all capital gains, dividends, and interest would continue to be subject to current tax rules.

For taxpayers with other income below the relevant threshold, the maximum exemption for investment equals the threshold minus other income. For example, a married couple with $150,000 of income from sources other than long-term gains, dividends, and interest would pay no tax on the first $50,000 of investment income and statutory tax rates on any investment income in excess of $50,000. This income would face current statutory rates—0 percent or 15 percent for long-term gains and qualified dividends and as high as 35 percent on other dividends and interest income.

Because non-qualified dividends and interest income would face higher statutory rates than long-term gains or qualified dividends, we assume that the former would be exempt ahead of the latter. Thus, a couple with $150,000 in other income, $40,000 in interest income, and $30,000 in qualified dividends would pay no tax on the interest income and $10,000 of the dividends but would pay tax on the remaining $20,000 of qualified dividend income.

The plan would allow businesses to continue to claim the research and experimentation credit, which is scheduled to expire under current law (but is assumed to be extended in the current policy baseline).

 
I go off of common sense. If you lower taxes that puts more people to work, when more people are working you have more income to tax... its pretty simple isnt it?
 
Obviously not but does that no make sense to you...

If more people have jobs the government would be collecting more income tax..!!?!?!
 
You're an idiot, There's a reason he has a release his plan yet. It's because he doesn't have one that will work get off his nuts and stop Giving excuses to like him. He's a scumbag and he's not going to help America, Stop defending him.
 
Jesus tittyfucking Christ... No it's fucking not! It's not "pretty simple"! It's INSANELY complicated!
 
This.

Do you idiots really think the U.S. tax code is simple? Shit is confusing as fuck and not black and white like you might be led to believe.
 
Employers pay more than just income tax...just saying.

More employees = higher insurance, medicare, social security, etc taxes.

There are reasons people go to college for many many years just to understand our tax code. Shit is so confusing.
 
Well its people that "wish he had a chance" that keep him from gaining the recognition. If you wish he had a chance, which he technically does, and if you support him, then why would you not show that support just as people do for the 2 major parties? when the very people that back someone are too pessimistic to even show support, it doesnt look good for a party.
 
Gary Larson's ideas are unrealistic. He attracts supporters from libertarian hipsters who want pot to be legal. Our country's economy is far to complicated to be run my libertarianism. The last person with libertarian ideologies we let run things was Alan Greenspan.....
 
What in the actual fuck are you talking about?

Precisely no one on Earth has a simple tax system, and the simpler ones are the smaller economies and third world countries.
 
I'm moving to Afghanistan; they have a simple tax code, a libertarian economy, and the equivalent of State's rights in provinces. Gary Larson 2012.
 
Without googling anything i know off the top of my head that France is not a third world country and their tax code is about 12% of what ours is. its like 1,900 pages..

I am also fairly certain that the Helvetic Confederation has a simpler tax system than the US which is why they are probably the #1 country in the world at making money.
 
Yeah, see, France's tax code is not remotely simple. It's roughly as complicated as most countries'. Additionally, the actual tax regime in that country is not contained in a single statute. Also, even though tax regimes are generally more or less standardized by necessity of global competition (i.e. France's has to look a lot like the Netherlands' so that foreign entities will know what to expect when they invest in those countries), France is a civil law jurisdiction and should generally not be compared to a common law jurisdiction like the USA in terms of what its laws look like.

The Swiss tax code is also quite complex (standard system of income tax, VAT and withholdings, plus property tax and even a capital tax on corporations). Again, it looks a lot like most developed nations' tax systems. More importantly, though, the Swiss government's ability to raise revenue has very little to do with how intricate its laws are and a whole lot to do with... well, Swiss banks. I don't know how you're calling the Swiss government #1 in the world at raising money; revenue as a %age of GDP for them is about average, same as Canada's.

The US has a particularly convoluted set of tax laws. But no tax system is particularly simple, and certainly no developed nation has an easy to understand tax regime. Calling 1900 pages "simple", particularly considering what's IN those 1900 pages, is a joke. For reference, I just flipped open my Canadian Income Tax Act, which is a practitioner's edition that has annotations to make it longer and proposed amendments, and it's about 1700 pages. Yet if you tried to read it it would seem like it's written in another language.

If you went to school to learn about the Swiss or French tax system for a few years, you'd still be a novice.
 
His point is that if you have 5 people with jobs averaging 50k per year and say a 25% average effective tax rate, you get 25% of 250,000 = 62,500. If you have 10 people averaging 50k per year at the same tax rate you get 125,000. More people with jobs = more revenue. That's the personal tax rate, has nothing to do with the corporate tax rate.

His point is so oversimplified as to be basically meaningless, however. Tax policy decisions in the real world are unbelievably, mind-bogglingly complicated and even when you have really smart, really experienced people making those decisions half the time it's a crap shoot as to what the actual effects will be, because a country with a hundred million variables and developments you can't possibly predict without a time machine make it so.
 
That's not common sense, it's wishful thinking. The only reason tax cuts on employers would be able to help create jobs is if demand were high and hiring new people were too expensive. Well, if that were the case, we would expect to see businesses struggling to keep up with sales. Their existing workers would be working longer hours. What we actually see is the exact opposite; demand is low and most companies have excess capacity already that they can't use. Hours are less than they were pre-recession even though most companies have less workers.
We are in a demand driven recession, there is no supply side solution.
 
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