FOR SEVERAL weeks, we’ve been asking Republican presidential nominee Mitt
Romney to explain how he can cut taxes, as promised, without adding to the
nation’s debt, as also promised. Now he’s effectively let the cat out of the
bag: He can’t.
Mr. Romney’s tax plan calls for reducing income tax rates by 20 percent. The
top bracket would go from 35 percent to 28 percent. He has said that he can do
this in a revenue-neutral way by eliminating loopholes. While the rich might pay
more, he has said, the middle class would pay less.
There are a couple of pitfalls here. The first is that while closing
loopholes sounds good — Make those oil companies pay! — the costliest ones are
cherished by most Americans. These are tax provisions that promote home
ownership, charitable giving, and employer-provided health care and that allow
taxpayers to deduct their state and local income taxes. Limiting or eliminating
these popular “loopholes” would be extremely difficult.
The second obstacle, as shown by the Tax Policy Center, a joint
venture of the Brookings Institution and the Urban Institute, is that Mr.
Romney’s plan is mathematically impossible, even if it were politically
feasible. Take away every deduction from every wealthy household, the center
calculated, and you still couldn’t make up the revenue the government would lose
by reducing rates without raising taxes on middle-class households.
Not so, Mr. Romney protested recently, and cited an analysis by Harvard economist Martin Feldstein, a Romney campaign
adviser. Mr. Feldstein said the math could work — if you took away every
deduction from every household earning $100,000 or more. (Even then, he couldn’t
pay for the estate tax abolition that Mr. Romney also favors, but never mind.)
Is that what Mr. Romney has in mind, we asked? If not, what is his plan?
On Friday, ABC’s George Stephanopoulos put the question to the candidate. “No, middle income is
$200,000 to $250,000 and less,” Mr. Romney replied.
But then, the Harvard study shows, the math can’t work. His answer? “The
biggest source of getting the country to a balanced budget is not by raising
taxes or by cutting spending,” he said. “It’s by encouraging the growth of the
economy.”
In other words, we are back to counting on magic — to “dynamic scoring,” the
voodoo economics of the Reagan era, the wishful thinking of President George W.
Bush’s 2001 and 2003 tax cuts that helped turn a surplus into the deficit now
weighing the nation’s economy. Cut taxes and hope the economy grows faster than
predicted.
At a time when the nation is already on course to build up a debt
Romney to explain how he can cut taxes, as promised, without adding to the
nation’s debt, as also promised. Now he’s effectively let the cat out of the
bag: He can’t.
Mr. Romney’s tax plan calls for reducing income tax rates by 20 percent. The
top bracket would go from 35 percent to 28 percent. He has said that he can do
this in a revenue-neutral way by eliminating loopholes. While the rich might pay
more, he has said, the middle class would pay less.
There are a couple of pitfalls here. The first is that while closing
loopholes sounds good — Make those oil companies pay! — the costliest ones are
cherished by most Americans. These are tax provisions that promote home
ownership, charitable giving, and employer-provided health care and that allow
taxpayers to deduct their state and local income taxes. Limiting or eliminating
these popular “loopholes” would be extremely difficult.
The second obstacle, as shown by the Tax Policy Center, a joint
venture of the Brookings Institution and the Urban Institute, is that Mr.
Romney’s plan is mathematically impossible, even if it were politically
feasible. Take away every deduction from every wealthy household, the center
calculated, and you still couldn’t make up the revenue the government would lose
by reducing rates without raising taxes on middle-class households.
Not so, Mr. Romney protested recently, and cited an analysis by Harvard economist Martin Feldstein, a Romney campaign
adviser. Mr. Feldstein said the math could work — if you took away every
deduction from every household earning $100,000 or more. (Even then, he couldn’t
pay for the estate tax abolition that Mr. Romney also favors, but never mind.)
Is that what Mr. Romney has in mind, we asked? If not, what is his plan?
On Friday, ABC’s George Stephanopoulos put the question to the candidate. “No, middle income is
$200,000 to $250,000 and less,” Mr. Romney replied.
But then, the Harvard study shows, the math can’t work. His answer? “The
biggest source of getting the country to a balanced budget is not by raising
taxes or by cutting spending,” he said. “It’s by encouraging the growth of the
economy.”
In other words, we are back to counting on magic — to “dynamic scoring,” the
voodoo economics of the Reagan era, the wishful thinking of President George W.
Bush’s 2001 and 2003 tax cuts that helped turn a surplus into the deficit now
weighing the nation’s economy. Cut taxes and hope the economy grows faster than
predicted.
At a time when the nation is already on course to build up a debt
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