Tax Policy Center* Says Romney Lies
Mitt Romney proposes reducing tax brackets by 20% and cutting the estate tax (to zero IIRC). He will keep or expand favored treatment of capital gains and dividends. He claims that he doesn’t plan to cut taxes for the rich. He claims that he will avoid such cuts by eliminating deductions, credits and exclusions. One of his claims must be false as they are arithmentically inconsistent.
update: Beyond parody. Romney aid Lanhee Chen says that the Tax Policy Center conclusion that Romney’s proposal is gives to the rich is “biased” because it ignores Romney’s proposed corporate income tax cuts
“The study analyzes only half of Governor Romney’s tax program, ignoring the reforms that would make America’s corporations more competitive by moving from the highest corporate tax rate in the industrialized world to one that is comparable to our trading partners.”
Yep that’s the way to convince the public. Note that, in addition to tax cuts for rich people, there are tax cuts for corporations. Importantly Chen does not deny that Romney lied when he said he didn’t seek tax cuts for the rich. Chen’s line is the usual supply side trickle down line that tax cuts for the rich and for corporations will help the non rich by causing greater growth. I know of no evidence which supports this claim.
I almost feel sorry for the Romney campaign.
I can’t keep track of his lies (hell Steve Benen has trouble). Wouldn’t it be easier to keep track of his non-lies ?
A new report from the Brookings Institution and the Tax Policy Center includes the following.
The key intuition behind our central result is that, because the total value of the available tax expenditures (once tax expenditures for capital income are excluded) going to high-income taxpayers is smaller than the tax cuts that would accrue to high-income taxpayers, high-income taxpayers must necessarily face a lower net tax burden. As a result, maintaining revenue neutrality mathematically necessitates a shift in the tax burden of at least $86 billion away from high-income taxpayers onto lower- and middle-income taxpayers. This is true even under the assumption that the maximum amount of revenue possible is obtained from cutting tax expenditures for high-income households.
Amazingly, even if they accept Greg Mankiw’s estimates of the effect of rate cuts on growth (which assumes no increase in the deficit even in the short run). They still conclude that a Romney claim must be false.
Nevertheless, even if one were to use the model from Mankiw and Weinzierl (2006) and assume that after five years 15 percent of the $360 billion tax cut is paid for through higher economic growth, the available tax expenditures would still need to be cut by 56 percent; on net lower- and middle-income taxpayers would still need to pay higher taxes.
This analysis will come as a complete shock to exactly zero Angrybear readers (including the conservatives) but might stimulate discussion in comments.
* Title corrected. The Tax Policy Center is a joint center of the Brookings Institute and the Urban Institute not a separate entity.
Well I read the Brookings report then had to go to Romney’s web-site and in my area of interest (estate taxes)the Romney web-site says, “Eliminate the Death Tax”. That’s not very detailed although to people ignorant of how the current estate tax system works it sounds like a complete elimination of the estate tax. However it’s not so simple. What Mr. Romney doesn’t tell you is that along with the repreal of the estate tax he would also repeal the “step-up” in basis that under today’s law provides heirs relief from capital gains taxes on appreciation of estate assets. So while today’s law levies an estate tax with no capital gains tax for heris on apprecaited estate assets, a repeal of the estate tax would also repeal this “step-up” in basis and subject heirs to capital gains tax on inherited assets. And instead of just wealthy families being subject to the estate tax all heirs would be subject to this capital gains tax. I recently saw a proprietary study from one of North America’s largest life insurance companies that said the tax revenue differential between the two systems is negligible. I thought Brookings was reliable…wrong again!
If Mr Romney didn’t tell you, then who did ?
littlejohn that’s an interesting observation. Brookings says “maintaining revenue neutrality mathematically necessitates a shift in the tax burden of at least $86 billion away from high-income taxpayers onto lower- and middle-income taxpayers.” You identify what amounts to a new tax in Romney’s plan and say “instead of just wealthy families being subject to the estate tax all heirs would be subject to this capital gains tax.” If you are correct that your tax burden shift accounts for the mathematical discrepancy, then it’s still a shift, but not as large as Brookings says. Have I got that about right?
PJR-You’re right. It seems as if the idea of “broadening the base” is in vogue right now in DC. Aside from the political impossibility of passing estate tax repeal(senate repubs tried twice when they had both houses and the presidency but failed), typically revenue laws need to be durable. Sure, repeal it today but in two years or four years or eight years the dems will reinstate the tax. That makes multi-generational planning pretty tough.
Robert-You’re right as well. In May while Members were in recess the chief legislative aide for a senator on the finance committee personally told me that Romney’s people were modeling their estate tax repeal efforts on Kyl’s failed attempts during the Bush presidency.
I have a policy for the use of anonymous sources in comments on my post. Prove that your source would be punished for revealing the information or delete your comment.
“I know this guy who told me …” does not count as evidence anyway. And the authors of the study didn’t hear the rumor I heard from I won’t tell you who does not imply that they made a mistake as you assert.
Robert…I agree.
Feel free to delete the comment. It was about 15 seconds of a 30 minute conversation. But, you’re right it is pure speculation at this point.