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Wednesday, August 8, 2012

WSJ: The Romney Hood Tax Fairy Tale

Wall Street Journal editorial:  The Romney Hood Fairy Tale: The False, Invented Analysis Behind Obama's Tax Claims:

As he escalates his class war re-election campaign, President Obama has taken to calling Mitt Romney's economic plan "Robin Hood in reverse" or "Romney Hood." The charge is that even though Mr. Romney is proposing to cut tax rates for everybody across the board, Mr. Romney will finance this by imposing a tax increase on the middle class. His evidence is a single study by the Tax Policy Center, a liberal think tank that has long opposed cutting income tax rates.

The political left always says Daddy Warbucks gets all the tax-cut money. So this is hardly news, except that the media are treating this joint Brookings Institution and Urban Institute analysis as if it's nonpartisan gospel. In fact, it's a highly ideological tract based on false assumptions, incomplete data and dishonest analysis. In other words, it is custom made for the Obama campaign.

By the way, even the Tax Policy Center admits that "we do not score Governor Romney's plan directly as certain components of his plan are not specified in sufficient detail." But no matter, the study plows ahead to analyze features of the Romney plan that aren't even in it. ...

So on four separate occasions what TPC says is "mathematically impossible"—cutting tax rates and making the tax system more progressive—actually happened. Hats off to the scholars at TPC: Their study manages to claim that what happens in real life can't happen in theory.

The TPC analysis also fails to acknowledge how highly dependent the current tax system is on the very rich. As the Tax Foundation explains in a recent report based on CBO data: "The top 20 percent of households pay 94 percent of federal income taxes. The bottom 40 percent have a negative income tax rate, and the middle quintile pays close to zero." ...

What the Obama campaign and its acolytes at the Tax Policy Center are really saying is that tax reform that reduces rates and makes all income groups better off is impossible. This is a far cry from what Democrats used to believe, going back to Jack Kennedy in 1964 and in the 1980s when prominent Democrats Bill Bradley, Dick Gephardt and Don Rostenkowski helped to write the 1986 tax reform.

The Obama Democrats, by contrast, favor income redistribution and raising rates on the wealthy for their own partisan political sake, no matter the damage to growth, the cost in lost revenue, or a less progressive tax code as the rich exploit loopholes.

The great irony is that the candidate most likely to raise taxes on the middle class is Mr. Obama. He could raise every tax on the rich he proposes and still not come up with enough revenue to finance the increases in spending he wants in a second term. Where do you think he'll turn then?

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Comments

Since disposable income is higher and per capita economic growth is faster in states and countries that have adopted progressive policies, we know those policies are efficient, and more than pay for themselves.

Republicans haven't cared about efficiency since Reagan's star wars program.

They care more about the rich having yachts or private jets or servants than about the poor having healthcare or education or a safe way to get to work in the morning. Because yachts and fur coats and $3,000 handbags and $20,000 custom made suits are efficient, and investing in infrastructure, education, and healthcare is wasteful.

If you only care about the ultra rich, and no one else matters.

Posted by: Anon | Aug 9, 2012 5:34:26 AM

The rich are clearly paying too much in taxes:
http://www.youtube.com/watch?v=suZb9Z0b05I&feature=related
http://www.youtube.com/watch?v=fDPBxN9Ez1o&feature=related
http://www.youtube.com/watch?v=kQq54vOk2zc&feature=related

And the poor and middle class are clearly paying too little:
http://www.youtube.com/watch?v=PbPmO_8eIrY

Once we fix this, the world will be more "efficient."

Posted by: Anon | Aug 9, 2012 9:03:09 AM

Romney leaves a lot of blanks in his proposals because he numbers -- cutting taxes, reducing the deficit -- do not add up. So it is up to others to fill in the blanks. Sure, Romney could balance the budget instead by cutting the pentagon budget and social security instead. If the WSJ is going to criticize a study which tries to fill in the blanks -- it is up to the WSJ to then say what blanks the WSJ filled in and how that balances the budget.

The fact of the matter is if Romney cuts taxes on the wealthy as much as he plans to -- something else has to give. The WSJ should be criticizing Romney for not saying what that something -- or combination of many somethings would be.

Posted by: JQ | Aug 9, 2012 1:36:35 PM

Regular readers of this Forum will note an earlier post about a paper from Rice University which concluded that the Romney plan would increase growth and employment while at the same time admitting the research was not based on details of the plan which Mr. Romney refuses to release. But of course the WSJ has so far not found fault with that plan with a comment like this.

"By the way, even the Tax Policy Center admits that "we do not score Governor Romney's plan directly as certain components of his plan are not specified in sufficient detail." But no matter, the study plows ahead to analyze features of the Romney plan that aren't even in it. ..."

So the conclusion here is that analysis of the Romney plan based on assumptions of what is in it is correct if the results of the study are favorable to Romney, but not correct if the results are unfavorable to Romney.

Posted by: David R. | Aug 9, 2012 5:33:21 PM

I'm surprised that Anon didn't claim that Romney could give everyone tax cuts if he stated paying taxes.

Posted by: Woody | Aug 10, 2012 8:11:10 AM