Bloomberg: The Final Word on Mitt Romney's Tax Plan

[Lakhota]

By Josh Barro

Mitt Romney's campaign says I'm full of it. I said Romney's tax plan is mathematically impossible: he can't simultaneously keep his pledges to cut tax rates 20 percent and repeal the estate tax and alternative minimum tax; broaden the tax base enough to avoid growing the deficit; and not raise taxes on the middle class. They say they have six independent studies -- six! -- that "have confirmed the soundness of the Governor’s tax plan," and so I should stop whining. Let's take a tour of those studies and see how they measure up.

The Romney campaign sent over a list of the studies, but they are perhaps more accurately described as "analyses," since four of them are blog posts or op-eds. I'm not hating -- I blog for a living -- but I don't generally describe my posts as "studies."

None of the analyses do what Romney's campaign says: show that his tax plan is sound. I'm going to walk through them individually, but first I want to make a broad point.

The Tax Policy Center paper that sparked this discussion found that Romney's plan couldn't work because his tax rate cuts would provide $86 billion more in tax relief to people making over $200,000 than Romney could recoup by eliminating tax expenditures for that group. That means his plan is necessarily a tax cut for the rich, so if Romney keeps his promise not to grow the deficit, he'll have to raise taxes on the middle class.

Various analyses have adjusted TPC's assumptions in an effort to bring down that $86 billion deficit. But getting from $86 billion down to $0 is not enough to make Romney's proposal work. For Romney's math to add up, he actually needs a substantial surplus of a high-income base broadening above the cost of his high-income rate cuts.

This is for two reasons. First, TPC's thought experiment -- eliminate as many deductions as possible at the top while holding those below $200,000 harmless from tax increases -- was not only exceedingly generous in granting Romney's assumptions. It was impossibly generous. Under the terms analyzed by the TPC study, a taxpayer earning $199,999 would face a drastically higher tax bill for earning $1 more in income. That doesn't happen in the real world.

Instead you would need to phase in restrictions in deductions on the wealthy, which would reduce the amount of revenue those restrictions generated. Harvard Professor Martin Feldstein, in one of the analyses cited by the Romney campaign, makes a rough estimate that a phase-in would cost about $15 billion. My back-of-the-envelope calculations roughly match that.

There is a second reason Romney needs a big surplus for his plan to work. When asked why he won't lay out a specific plan to eliminate tax expenditures, Romney consistently says it's because he can't dictate a plan to Congress and will work with legislators from a menu of options. As he said in last week's debate:

I'm going to work together with Congress to say, OK, what are the various ways we could bring down deductions, for instance?. . . . There are alternatives to accomplish the objective I have, which is to bring down rates, broaden the base, simplify the code and create incentives for growth.​

There are only meaningful "alternatives" to discuss with Congress if Romney can pick and choose from a pool of tax preferences for the wealthy that far exceeds the $250 billion annual cost of his rate cuts for them. If the pool of available base broadeners is just large enough to finance his tax cuts, then Romney actually is dictating a plan to Congress: if they don't eliminate exactly the set of preferences he proposes, his plan will either have to raise taxes on the middle class or grow the deficit.

TPC finds that Romney's rate cuts, plus elimination of the estate tax and Alternative Minimum Tax, would cost the Treasury about $250 billion in revenue from high earners. If he could somehow find, say, $300 billion in base broadeners from the wealthy, $15 billion of which would have to go to a phaseout, that wouldn't leave a lot of "alternatives" on the table. Yet there aren't enough base broadeners for Romney to reach the $300 billion level, let alone exceed it.

Now, on to the six studies.

More: The Final Word on Mitt Romney's Tax Plan - Bloomberg

 

[Lakhota]

Joe Biden, Mitt Romney Agree That Romney Tax Plan Never Been Tried

 

[Old Rocks]

If Romney wins the election, watch for the long face as he states that they just have to eliminate the Mortgage interest deduction as well as the college tuition exemption. While at the same time, he gives the student loan program back to the banks so they can charge userous rates.

 

[OKTexas]

If Romney wins the election, watch for the long face as he states that they just have to eliminate the Mortgage interest deduction as well as the college tuition exemption. While at the same time, he gives the student loan program back to the banks so they can charge userous rates.

Please explain why I should subsidize your mortage, or your kids college and show me in the Constitution where the government has the power to loan anyone money.

 

[AmericanFirst]

If Romney wins the election, watch for the long face as he states that they just have to eliminate the Mortgage interest deduction as well as the college tuition exemption. While at the same time, he gives the student loan program back to the banks so they can charge userous rates.

Please explain why I should subsidize your mortage, or your kids college and show me in the Constitution where the government has the power to loan anyone money.

The libtards do not care about the constitution so it is pointless to wait for them to show you because they can't.

 

[OKTexas]

By Josh Barro

Mitt Romney's campaign says I'm full of it. I said Romney's tax plan is mathematically impossible: he can't simultaneously keep his pledges to cut tax rates 20 percent and repeal the estate tax and alternative minimum tax; broaden the tax base enough to avoid growing the deficit; and not raise taxes on the middle class. They say they have six independent studies -- six! -- that "have confirmed the soundness of the Governor’s tax plan," and so I should stop whining. Let's take a tour of those studies and see how they measure up.

The Romney campaign sent over a list of the studies, but they are perhaps more accurately described as "analyses," since four of them are blog posts or op-eds. I'm not hating -- I blog for a living -- but I don't generally describe my posts as "studies."

None of the analyses do what Romney's campaign says: show that his tax plan is sound. I'm going to walk through them individually, but first I want to make a broad point.

The Tax Policy Center paper that sparked this discussion found that Romney's plan couldn't work because his tax rate cuts would provide $86 billion more in tax relief to people making over $200,000 than Romney could recoup by eliminating tax expenditures for that group. That means his plan is necessarily a tax cut for the rich, so if Romney keeps his promise not to grow the deficit, he'll have to raise taxes on the middle class.

Various analyses have adjusted TPC's assumptions in an effort to bring down that $86 billion deficit. But getting from $86 billion down to $0 is not enough to make Romney's proposal work. For Romney's math to add up, he actually needs a substantial surplus of a high-income base broadening above the cost of his high-income rate cuts.

This is for two reasons. First, TPC's thought experiment -- eliminate as many deductions as possible at the top while holding those below $200,000 harmless from tax increases -- was not only exceedingly generous in granting Romney's assumptions. It was impossibly generous. Under the terms analyzed by the TPC study, a taxpayer earning $199,999 would face a drastically higher tax bill for earning $1 more in income. That doesn't happen in the real world.

Instead you would need to phase in restrictions in deductions on the wealthy, which would reduce the amount of revenue those restrictions generated. Harvard Professor Martin Feldstein, in one of the analyses cited by the Romney campaign, makes a rough estimate that a phase-in would cost about $15 billion. My back-of-the-envelope calculations roughly match that.

There is a second reason Romney needs a big surplus for his plan to work. When asked why he won't lay out a specific plan to eliminate tax expenditures, Romney consistently says it's because he can't dictate a plan to Congress and will work with legislators from a menu of options. As he said in last week's debate:

I'm going to work together with Congress to say, OK, what are the various ways we could bring down deductions, for instance?. . . . There are alternatives to accomplish the objective I have, which is to bring down rates, broaden the base, simplify the code and create incentives for growth.​

There are only meaningful "alternatives" to discuss with Congress if Romney can pick and choose from a pool of tax preferences for the wealthy that far exceeds the $250 billion annual cost of his rate cuts for them. If the pool of available base broadeners is just large enough to finance his tax cuts, then Romney actually is dictating a plan to Congress: if they don't eliminate exactly the set of preferences he proposes, his plan will either have to raise taxes on the middle class or grow the deficit.

TPC finds that Romney's rate cuts, plus elimination of the estate tax and Alternative Minimum Tax, would cost the Treasury about $250 billion in revenue from high earners. If he could somehow find, say, $300 billion in base broadeners from the wealthy, $15 billion of which would have to go to a phaseout, that wouldn't leave a lot of "alternatives" on the table. Yet there aren't enough base broadeners for Romney to reach the $300 billion level, let alone exceed it.

Now, on to the six studies.

More: The Final Word on Mitt Romney's Tax Plan - Bloomberg

Only when congress writes the bill, and it is passed by both houses of congress and Romney signs it into law, can anyone have a final word on Romneys tax plan. Anything short of that is pure speculation.

 

[Stephanie]

Well we know Obama's tax plans, TAX THE SHIT OUT OF US

and they are a coming, we should all rejoice

Remember that largest cigarette tax hike of ANY President the Dear Leader laid on us right when he took office...

And then we have ObamaTax to look forward too..

We should all run right out and vote for him so we can HAVE SOME MORE

whooohooooo

 

[zeke]

Well we know Obama's tax plans, TAX THE SHIT OUT OF US

and they are a coming, we should all rejoice

Remember that largest cigarette tax hike of ANY President the Dear Leader laid on us right when he took office...

And then we have ObamaTax to look forward too..

We should all run right out and vote for him so we can HAVE SOME MORE

whooohooooo

You are stupid. Obama has cut taxes on the middle and the lower end of the wage scale.
And you really are gonna worry that taxes on cigs went up? With what the cost of treating cancer from cig smoking. wtf. Oh I get it. You smoke.

And you are scared of some tax you think you may have to pay. Or are you gonna claim you are in the multi millioniare range?

Check under your bed at night. A boogie man may be there.

 

[Skull Pilot]

If Romney wins the election, watch for the long face as he states that they just have to eliminate the Mortgage interest deduction as well as the college tuition exemption. While at the same time, he gives the student loan program back to the banks so they can charge userous rates.

It's not the government's responsibility to give people write offs for interest or to loan money to people for college.

We should end both of them

 

[Skull Pilot]

Well we know Obama's tax plans, TAX THE SHIT OUT OF US

and they are a coming, we should all rejoice

Remember that largest cigarette tax hike of ANY President the Dear Leader laid on us right when he took office...

And then we have ObamaTax to look forward too..

We should all run right out and vote for him so we can HAVE SOME MORE

whooohooooo

You are stupid. Obama has cut taxes on the middle and the lower end of the wage scale.
And you really are gonna worry that taxes on cigs went up? With what the cost of treating cancer from cig smoking. wtf. Oh I get it. You smoke.

And you are scared of some tax you think you may have to pay. Or are you gonna claim you are in the multi millioniare range?

Check under your bed at night. A boogie man may be there.

You do realize that dimwitcraps think any couple making 250K a year are millionaires don't you?

 

[zeke]

If Romney wins the election, watch for the long face as he states that they just have to eliminate the Mortgage interest deduction as well as the college tuition exemption. While at the same time, he gives the student loan program back to the banks so they can charge userous rates.

It's not the government's responsibility to give people write offs for interest or to loan money to people for college.

We should end both of them

Really? Thank the lobbyist for the real estate agents for the mortgage interest write off. Of course home ownership is a driving force for the economy. For some reason people like to improve homes they own by buying home furnishing and materials to improve their homes. And the guvmint likes it that people are spending money. Helps generate jobs which helps generate tax revenue to the gunmint.

Now why would the guvmint want to do that? Lets start out by eliminating the interest write off of anyone making over a million dollars a year. See how that works out and go from there.

And I don't mind that the hated guvmint helps educate people. Why should I reject the idea of guvmint aid to help people become better educated and able to make more money.
Again, more jobs, higher incomes and more tax revenues.

You afraid that an educated populace will never vote rethug again. Is that your problem; lack of education?

It's not ever to late to become educated. Try it.

 

[Skull Pilot]

If Romney wins the election, watch for the long face as he states that they just have to eliminate the Mortgage interest deduction as well as the college tuition exemption. While at the same time, he gives the student loan program back to the banks so they can charge userous rates.

It's not the government's responsibility to give people write offs for interest or to loan money to people for college.

We should end both of them

Really? Thank the lobbyist for the real estate agents for the mortgage interest write off. Of course home ownership is a driving force for the economy. For some reason people like to improve homes they own by buying home furnishing and materials to improve their homes. And the guvmint likes it that people are spending money. Helps generate jobs which helps generate tax revenue to the gunmint.

People bought and built homes before the interest write off and will do so if it ends. In fact it might even lower the prices of houses as only people who can actually afford them will buy

Now why would the guvmint want to do that? Lets start out by eliminating the interest write off of anyone making over a million dollars a year. See how that works out and go from there.

There should be no special treatment for anyone. If you want to end it for one group then end it for all.

And I don't mind that the hated guvmint helps educate people. Why should I reject the idea of guvmint aid to help people become better educated and able to make more money.
Again, more jobs, higher incomes and more tax revenues.

People went to college before the government gave them money and will go to college if the government stops giving them money. In fact tuition might come down when people actually have to use their own money to go to school.

You afraid that an educated populace will never vote rethug again. Is that your problem; lack of education?

It's not ever to late to become educated. Try it.

For one I am not a repugnantcan and two I have 2 bachelors and a master's degree which I paid for myself by working full time while going to school.

But little sheep that you are, you probably think no one can do that right?

 

[zeke]

Skull. It is greaat that you have three degrees. And paid for all of it with the job you had.

What year did you obtain these degrees? How much was a year of college when you attended? Or was it very recently? How much did the job pay that you used to work your way through college? Minimum wage? Any college internships. College work programs?
Anything that helped you obtain those degrees? Or all on your own? If all on your own, you are the exception not the rule.

Yea without looking up the numbers, I think that homeownership rates went up after WWII and when the dedcution for interest went into effect. Now if you want to contend that lower homeownership rates is good for the USA, so be it. I can't totally disagree but then I own rental properties. More decent quality tenants is OK with me. But they sure don't improve a home they don't own and they don't take nearly as much pride in a neighborhood as the owners.

And I think after WWII the guvmint started helping those that wanted to go to college, go to college. GI Bill in particular. You think we benefited from all those returning Vets becoming more and better educated? You think all those people that went to school with the help of the guvmint didnt make major contributions to our society as well as paying more taxes on higher income.

If you take away guvmint education assistance and fewer people go to college, how does that help this country in a world economy?

What field do you work in? Economics?

 

[zeke]

Oh skull and on the "special treatment". You think the Koch Brothers giving all those millions to a political party don't want "special treatment"? How about Buffet. Giving millions and not wanting anything. LMAO.

In a "perfect" world, your idea all equal treatment for all might make sense. But when a person or corp can give away millions to a political party (and you and I can't) and to not understand that they receive "special" treatment is more than a little naive don't you think? Lets start with taking away the "special" treatment that multi millioniares get and see how that goes. If all goes well, then we can start taking away "special" treatment for the rest of us.

Life ain't fair and anyone that says it should be is delusional.

 

[peach174]

So you want that GE and these larger type of companies, continue to pay no taxes because of the deductions they can can get?
Romney's tax plan would close the loopholes so that the larger corporations pays their taxes.
The middle class would get a large relief as well as all the small business. They would be able to grow and expand and hire more employees. This also brings in more revenue. This is exactly what we need right now.

 

[Stephanie]

Well we know Obama's tax plans, TAX THE SHIT OUT OF US

and they are a coming, we should all rejoice

Remember that largest cigarette tax hike of ANY President the Dear Leader laid on us right when he took office...

And then we have ObamaTax to look forward too..

We should all run right out and vote for him so we can HAVE SOME MORE

whooohooooo

You are stupid. Obama has cut taxes on the middle and the lower end of the wage scale.
And you really are gonna worry that taxes on cigs went up? With what the cost of treating cancer from cig smoking. wtf. Oh I get it. You smoke.

And you are scared of some tax you think you may have to pay. Or are you gonna claim you are in the multi millioniare range?

Check under your bed at night. A boogie man may be there.

You're a friggen joke..those cigarettes TAXES hurt mostly the POOR and hits people below the $250,000 range who Obama claimed he would not raise taxes on..

now for the rest all I see is spew which is about all you ever post

 

[Skull Pilot]

Skull. It is greaat that you have three degrees. And paid for all of it with the job you had.

What year did you obtain these degrees? How much was a year of college when you attended? Or was it very recently? How much did the job pay that you used to work your way through college? Minimum wage? Any college internships. College work programs?
Anything that helped you obtain those degrees? Or all on your own? If all on your own, you are the exception not the rule.

It doesn't matter when I got them but my first bachelor's was in 1990. My last degree was in 2002. I worked full time and went to school year round. I took no financial aid and no loans. I took advantage of the CLEP program as well

Yea without looking up the numbers, I think that homeownership rates went up after WWII and when the dedcution for interest went into effect. Now if you want to contend that lower homeownership rates is good for the USA, so be it. I can't totally disagree but then I own rental properties. More decent quality tenants is OK with me. But they sure don't improve a home they don't own and they don't take nearly as much pride in a neighborhood as the owners.

I said nothing about numbers. I said people bought and built homes before the deduction and will do so if it ends. What does it matter how many people buy homes if they can't afford them?

And I think after WWII the guvmint started helping those that wanted to go to college, go to college. GI Bill in particular. You think we benefited from all those returning Vets becoming more and better educated? You think all those people that went to school with the help of the guvmint didnt make major contributions to our society as well as paying more taxes on higher income.

The GI bill was for soldiers. Now everyone thinks they're entitled to government money (ie taxpayer money) for college.

Sorry but I do not agree that everyone needs to attend college.

If you take away guvmint education assistance and fewer people go to college, how does that help this country in a world economy?

What field do you work in? Economics?

You do realize that fewer people taking women's studies and psychology won't slow down the world economy one whit don't you?

 

[Katzndogz]

If Romney wins the election, watch for the long face as he states that they just have to eliminate the Mortgage interest deduction as well as the college tuition exemption. While at the same time, he gives the student loan program back to the banks so they can charge userous rates.

Please explain why I should subsidize your mortage, or your kids college and show me in the Constitution where the government has the power to loan anyone money.

Why should the tax payer subsidize the college tuition of any wealthy family that can well afford it. We should have had a progressive exemption system long ago.

 

[Skull Pilot]

If Romney wins the election, watch for the long face as he states that they just have to eliminate the Mortgage interest deduction as well as the college tuition exemption. While at the same time, he gives the student loan program back to the banks so they can charge userous rates.

Please explain why I should subsidize your mortage, or your kids college and show me in the Constitution where the government has the power to loan anyone money.

Why should the tax payer subsidize the college tuition of any wealthy family that can well afford it. We should have had a progressive exemption system long ago.

We should not be subsidizing anyone's college education.

If someone can't afford college they can either get kick ass grades and get a scholarship or they can get a job and work on a degree part time

Stop trying to pretend that if we don't subsidize college that people are unable to get a degree.

 

[Bfgrn]

If Romney wins the election, watch for the long face as he states that they just have to eliminate the Mortgage interest deduction as well as the college tuition exemption. While at the same time, he gives the student loan program back to the banks so they can charge userous rates.

Please explain why I should subsidize your mortage, or your kids college and show me in the Constitution where the government has the power to loan anyone money.

The libtards do not care about the constitution so it is pointless to wait for them to show you because they can't.

Maybe you 'patriots' should take some advise from a conservative?

Education is the cheap defense of nations.
Edmund Burke