A new study describing Mitt Romneyâ€™s tax cut proposals as an average tax increase for 95% of Americans is â€œa joke,â€ according to Romney adviser Eric Ferhnstrom. But policy aides offered no indication they plan to offer more details on Romneyâ€™s plan in order to clarify how it would be paid for and what they assumed its effects would be.
This goes on all the time in the Mittens camp. Someone will issue a criticism, with supporting data, of a proposed Romney policy and explain why that policy would have bad effects. And the Romney camp will just say “no, that’s a lie,” without offering a counter-argument.
In this case, what counter-argument the Romney camp offers is simply a fantasy.
Mitt Romneyâ€™s policy director Lanhee Chen claims that a new study showing 95% of Americans would see a tax hike under Romneyâ€™s tax reform plan is â€œbiasedâ€ and fails to take into account the explosion of economic growth that will occur under Romneyâ€™s administration.
Bring on the Underpants Gnomes.
Very, very simply, Mittens is proposing across-the-board tax rate cut, plus elimination of some taxes that only the wealthy pay, plus increases in the defense budget, because spending more money on defense — whether the Pentagon needs it or not — proves you are Serious. And this will be revenue neutral, they claim, paid for by spending cuts and by eliminating some tax deductions, although he won’t say what would be cut or eliminated.
The Brookings Institute (and I’ve seen this elsewhere) look at this and say that the only way this would be revenue neutral is to eliminate tax deductions that benefit the Middle Class and cut spending on programs that benefit the poor and Middle Class, meaning that it would amount to an effective tax increase on most Americans.
The Tax Policy Center bent over backwards to make Romneyâ€™s promises add up. They assumed a Romney administration wouldnâ€™t cut a dollar of tax preferences for anyone making less than $200,000 until they had cut every dollar of tax preferences for everyone making over $200,000. They left all preferences for savings and investment untouched, as Romney has promised. They even tested the plan under a model developed, in part, by Greg Mankiw, one of Romneyâ€™s economic advisers, that promises â€œimplausibly large growth effectsâ€ from tax cuts. The fact that they couldnâ€™t make Romneyâ€™s numbers work even when they stacked all these scenarios on top of one another shows just how impossible Romneyâ€™s promises are.
The reason Romneyâ€™s plan doesnâ€™t work is very simple. The size of the tax cut heâ€™s proposing for the rich is larger than all of the tax expenditures that go to the rich put together. As such, it is mathematically impossible for him to keep his promise to make sure the top one percent keeps paying the same or more. …
… â€œFamilies with children currently receive 57 percent of the available tax expenditures examined in this exercise but 23 percent of the revenue reductions. Thus a reform that imposed an across-the-board reduction in tax expenditures would increase taxes much more on families with children than on childless adults.â€
It’s obvious the Mittens crew hasn’t worked out how their promises will be filled. In fact, when asked for details, they say that’s up to Congress.
But asked on a conference call whether the Romney campaign would offer up any more details on how they believe their plan would work instead, policy adviser Jonathan Burks demurred, saying it would be up to Congress to help fill in the blanks.
â€œThe governorâ€™s plan essentially lays out the parameters that he wants to achieve: lowering the tax rate by 20 percent, achieving revenue neutrality, and maintaining progressivity and within that he would write a tax plan that achieves those goals,â€ he said. â€œSo, itâ€™s not a question of â€˜today we have a 2000 page tax plan that could be scored.â€™â€
In other words, he’s expecting the help to make it work.
Update: Krugman —
And the Romney people respond with deep voodoo, invoking the supposed fabulous growth effects from his tax cuts. And who could argue? Remember how the economy tanked after Clinton raised taxes? Remember how great things were after Bush cut them? Oh, wait.