The 2012 presidential election shifted again today, from tax returns to tax plans. Assisted by the Brookings Institute, Team Obama came out to say that Romney’s tax would amount to a tax increase for middle class Americans and a tax cuts for the rich.
Obama got considerable help — and new stump speech material — on Wednesday from a new study by the nonpartisan Tax Policy Center that showed those earning more than $1 million could save about $87,000 in taxes under Romney’s plan, which reduces income tax rates by 20 percent across the board.
But those who earn less than $200,000 would actually see their taxes increase by as much as $1,339 under Romney’s plan, the study estimated, because they could lose popular tax breaks for employer health insurance, mortgage interest and state and local taxes.
Now I’m no tax accountant, but I do know BS when I smell it, and I smelled it around this story today. Turns out not only did one of the three people who put the study together, Adam Looney, work for the Obama White House, the plan they evaluated didn’t even have enough enough data yet to be effectively scored by the CBO. What it is is representative of plans that the GOP has been discussing for some time, and increasingly as the Tea Party has become the focal point of the party.
It doesn’t contain enough details to be properly scored, the way the Congressional Budget Office would. But it has several principles, which have been part of the Repub talking points for quite a while.
Romney wants the system to be simpler and flatter and he wants the effect of his program to be revenue neutral. Simpler means eliminate deductions and credits, although Romney hasn’t specified all the loopholes he would close. Flatter means the distance between the top marginal rates and the lower ones would decrease. Revenue neutral means the revamped tax code would raise the same amount of money as the current code, so — although it won’t help with deficit reduction, it won’t make the deficit bigger either.
The controversy surrounds the idea of closing loopholes–for individual taxpayers, higher income earners, and corporations–and lowering tax rates for those groups. According to Brookings, this will raise taxes on middle class Americans, but not on wealthier Americans. It did not, however, include the parts of Romney’s plan, just as broadly worded, for the record, that claims the tax adjustment will lead to a 9% rise in pay for workers, and will also cut the budget significantly. Why only part of a broadly worded plan was studied but the other parts weren’t is a matter for your conjecture.
Me, I’m waiting to hear more. I definitely like the ideas of simplifying the tax code, closing loopholes, and some leveling of the tax rate. To me that makes more sense than raising taxes, which is what the Democrats want to do, and if the ACA bill and other recent legislation is any indication, they won’t be careful about doing it. I don’t expect that Romney will just let this stand. Rather I expect he’ll be more specific about his whole economic plan, and that’s a good thing.