Tuesday, October 16, 2012

Bipartisan Congressional Tax Group Shows USA Cannot Afford Romney Tax Plan


Mr. Math Mitt's notions of what actually makes sense (basically "TRUST ME!") are probably better built for prime-time than Barack Obama's attempts to argue about angels, pinheads, and trillions of dollars.
The Joint Committee on Taxation of the Congress of the United States has some really bad news for Mitt Romney.

Romney's tax math sucks.

Unless of course, Romney's plan is to eliminate such tax provisions as tax credits for poorer Americans, and the health insurance exclusion enjoyed by most Americans (in other words, you don't currently pay taxes on those benefits), or Romney intends to start taxing social security payments to retirees.

The tax experiment run by the Joint Committee on Taxation did assume the following ideas (these are taken verbatim from the Joint Committee's report):
A. Repealing the individual alternative minimum tax.
B. Repealing the overall limitation on itemized deductions and personal exemptions for certain taxpayers.
C. Repealing all itemized deductions.
D. Taxing capital gains (and dividends) as ordinary income.
E. Repealing the interest exclusion on State and local bonds.
The Joint Committee ran a "revenue neutral" model, assuming that all tax rate cuts provided would be paid for by corresponding eliminations of deductions and loopholes.

And how much was the Committee able to lower tax rates and still remain revenue neutral?

All of 4%—and that's 4% cumulative cuts across current rates, not 4% for each tax rate. The 20% rate cuts , for each tax rate, that Romney proposes, and which tax cuts he includes as one of the key points of his plan to improve the US economy, is many times greater than what the Joint Committee says the nation can absorb.

That means something about Mitt Romney's tax math is missing—i.e., the details of how he expects to make it all work out. And those details are what he refuses to supply to voters.

This is the information we do know about what Romney is proposing:
A. He intends to cut each existing marginal tax rate by 20%.
B. Unlike in the Joint Committee model, Romney says his plan will "maintain current [low] tax rates on interest, dividends, and capital gains"—in other words, on the investment income of rich people such as Mitt Romney. In fact, Romney says he will eliminate entirely ALL taxes on investment income for "taxpayers with AGI (adjusted gross income) below $200,000". To understand the impact of this, it means Romney plans to eliminate all income taxes for a class of Americans who make more than the vast majority of poorer taxpayers. This favored class of prospective super-wealthy individuals, will be given a form of welfare to assist their entry into an even wealthier group of Americans, who can afford to pay servants to manage the hiding of their even larger fortunes in the Caymans and elsewhere.
C. In spite of creating this vast new, wealthy-on-welfare, class of citizens, Romney promises that he intends to keep his proposed tax rate reductions "revenue neutral"—so overall revenue coming into the government will not actually be reduced.
D. He promises to cut taxes on "middle-income families"—this is something he asserted in the first presidential debate. Presumably, Romney means in part that some portion of his huge tax break for wealthy (but not super-wealthy) Americans, would also benefit "middle-income families"—note not necessarily middle-class families. In fact, the median income in the USA, estimated at $50,000/year for a household, is not the income enjoyed by middle-class families. It represents more money than 75% of Americans earn in a year. As for $200,000? That's more money than is made by almost 99% of all Americans.
D. He promises not to raise taxes on "job creators"—the class of rich Americans Romney says deserve low tax rates because they create all the jobs. Here's where the real money is. Eliminate every tax break on this class, and you still can't pay for their 20% proposed tax rate cut. Exactly how Romney is not giving the 1% a massive tax break, he cannot or will not explain to the American people. He simply asserts, in spite of the math, that he won't do it, and expects voters to take Etch-a-Sketch Mitt's word for it.
So, if Romney is going to cut taxes for middle-income Americans, eliminate taxes entirely for many upper-income Americans, and not raise taxes on the rest of the rich people, then what is left? 

Oh right—poor Americans—the millions of people Romney says he doesn't care anything about, and who he says are deadbeats who don't contribute as real citizens. 

Romney has made no pledge about keeping those Americans' tax payments lower, because of course, and as he has said, promising to lower their taxes doesn't mean much when they are so poor they already don't pay any income taxes. In fact, 47% of Americans are so poor, or otherwise exempted, for example soldiers in combat, that they pay no income taxes.

But, according to Romney and other Republicans, these are the deadbeats of America who make it difficult for Republicans to keep making sure the rich people's tax rates can get ever lower—as rich people's profitable haul from the USA gets ever larger.

In the first presidential debate, Barack Obama allowed Mitt Romney to get away with tax-math murder. He seemed incapable of looking at his opponent and saying—your math is so dead wrong either you're lying or you're an inept fool. Yeah, he tried to say that in wordy, wonky, speeches that Romney just rejected by saying—"That's all wrong—I'm not doing anything Islama-Obama says."

It is hard to have a real, and especially accessible, assessment or discussion of numbers without some visual guides. That is why H. Ross Perot used to bring out his charts. That is why Bibi had his bomb cartoon. Supposedly, the rules disallow visual tools of this sort in the debates, but without them, we're reduced to candidates tossing back and forth competing claims about big numbers, without any way for voters to determine who is speaking more reliably and upon the basis of facts.*

In that event, the debate becomes a fashion and style show, which is absolutely the dumbest way to choose a president anybody could imagine. But it is the American Idol form currently being employed.

It is said Barack Obama finds the debate format offensively deficient in helping voters understand complex problems and the competing positions of the candidates. That seems a reasonable critique of what we have witnessed so far. But the problem is Obama signed off on the format. He could have refused to have debated Romney, or he could have demanded a longer debate format—maybe four hours on one Sunday night to thoroughly explain all the major positions.

Amazingly, tonight may decide the election. If Romney gets away with "That's not my position", and Obama doesn't say "Really Mitt—what's your position today?" with as much snarling sarcasm as he can muster, then get ready for four more years of Republican dictatorship in the White House.

As for taxes though—Romney is just plain lying when he says his math makes sense. It only does that if his real plan—the one he won't tell us about—will have truly devastating consequences for the majority of the American people.

*—And yes, you could stop and go fact-check every looney claim, but it does break up the flow.

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