by Kenneth Thomas
Romney Tax Plan as Budget Busting as Ever
Seriously, I could just re-post my February 27th post word for word tonight and it would be just as true as it was then. The Romney tax plan blows a $5 trillion hole in the budget via tax reductions and he still hasn’t told us anything about the tax breaks he would get rid of to pay for it, which he has to do because he calls it revenue neutral, as he did again in tonight’s debate.
Amazingly, Romney kept denying that his tax reductions reduce revenue by $5 trillion over 10 years when considered by themselves, even accusing the President of lying about it! He kept insisting that his plan was revenue neutral and that he would not adopt a plan that would reduce the share of taxes paid by the rich. Trust him. We have his word on it.* (Apparently, that is how CNN does fact-checking.).
Given his insistence on his proposal’s revenue neutrality, let me repeat my 5-step plan, “How to Read a Republican Tax Proposal.”
Step 1: Assume revenue neutrality.
Step 2: Look at what income is no longer taxed.
In the Romney plan, according to conservative economist Josh Barro, there is a $1 trillion reduction in corporate income tax, $3 trillion from the 20% reduction in tax rates (again, not 20 percentage points: the top rate falls from 35% to 28%), and $1 trillion from miscellaneous tax reductions, notably abolishing the Alternative Minimum Tax.
Step 3: Determine how much of that income you have.
Step 4: Ask what taxes have to be raised to get to revenue neutrality.
Step 5: Look in the mirror to see who pays them.
That would be the end of the story, except that the Romney budget is also raising military spending by $2 trillion, as the President pointed out in the debate. So that has to be offset, too.
Again, the bottom line is that if we cut taxes for the wealthy and corporations, it will impact the budget elsewhere, in some combination of tax increases on the middle class, program cuts, and deficit increases. Regardless of the spin surrounding it, if a proposal reduces some taxes but doesn’t reduce your taxes, you will lose out via these three methods of compensating for the lost revenue.
* If you aren’t old enough to remember, this is a reference to a great series of Isuzu car and truck ads featuring “Joe Isuzu,” whose signature line was “You have my word on it.”
cross posted with Middle Class Political Economist