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Tuesday, August 21, 2012

Bartlett: Exploring Mitt Romney’s Taxes and Tax Plan

New York Times:  Exploring Mitt Romney’s Taxes and Tax Plan, by Bruce Bartlett:

An examination of the two years of tax returns that the Republican presidential nominee Mitt Romney has made public sheds light on some fundamental concepts of taxation that illuminate his proposed tax cut. These include the meaning of “taxes” and “income.”

For most people, income is simple: it means wages or perhaps a pension or Social Security benefits. Income from capital – dividends, interest, rent and capital gains – seldom enters into the calculation. The vast bulk of such income is earned by the ultrawealthy, like Mr. Romney. ...

This is the key reason that Mr. Romney paid a federal income tax rate of 13.9% in 2010 and 15.4% in 2011. By contrast, his running mate, Representative Paul D. Ryan of Wisconsin, paid a rate of 15.9% in 2010 and 20% in 2011, despite an income that was 10% of Mr. Romney’s in 2010 and 15% in 2011. ...

The distribution of income is extremely relevant for Mr. Romney tax plan. He has said that he will close enough tax loopholes so that the wealthy will pay the same share of taxes they are paying now, even though he will cut their income tax rates by 20%. However, he has also said that the current low rates on dividends and capital gains, which expire at year’s end, will be made permanent. Thus Mr. Romney would preserve exactly those provisions of the tax code most responsible for millionaires like himself paying tax rates considerably lower than those with a fraction of his income, like Mr. Ryan. ...

The Tax Policy Center recently concluded that Mr. Romney’s numbers don’t add up. Either he will greatly increase the deficit or he will have to raise taxes on the middle class to maintain revenue neutrality. Even if every deduction, exclusion and credit for the wealthy was abolished, their taxes would still go down under Mr. Romney’s plan. Democrats have said that the Romney tax plan would raise taxes on the middle class. While this is logically consistent with what Mr. Romney has said about his plan, I do not believe that is his intention or what will happen if he is elected president. Rather, I think he and his advisers simply made up a proposal that was everything to everybody without bothering to check for internal consistency.

For someone who has made his business acumen and expertise with finance a cornerstone of his presidential run, that Mr. Romney’s signature campaign proposal doesn’t add up may be the most telling fact voters need to know about him. 

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Comments

The millions of people who have lost their jobs, the college graduates who still live with their parents, those who have given up looking, the record unemployed resorting to social security disability, and those who are underemployed are more concerned about getting decent jobs and paying any taxes than they are concerned about the political spin on someone else who does pay taxes and donates over 16% of his income to charity. The NYT and Bruce Bartlett don't care.

Posted by: Woody | Aug 21, 2012 7:15:58 PM

Maybe they don't Woody. But they will when the deficit explodes or their own taxes increase by $2k/year, or some combination thereof. When are you going to deal with the facts, Woody? Everyone from the WSJ to the NYT to the CBO has come to the same conclusion: Romney's numbers don't add up; Romney's numbers can't add up. Plainly stated, Romney's numbers are a lie.

Posted by: Publius Novus | Aug 22, 2012 1:57:08 PM

Another of the same from the utterly dreadful Bruce Bartlett, who seems obsessed with the idea that we're all not paying enough in taxes, and who isn't above fudging the issue and propagandizing from time to time. Ignoring the role of charitable contributions and ignoring the effect of inflation on nominal capital gains is something that no serious commentator could do. Conclusion: Bruce Bartlett is not a commentator who should be taken seriously. But we knew that anyway.

Posted by: No-no-no | Aug 23, 2012 11:47:29 PM