Epiphanyblog

All about ideas…

Where Does Romney Stand on Taxes?

with one comment

Mitt RomneyNow that Mitt Romney is almost certainly to win the GOP nomination for the President, it’s time to examine his policies so we, as a nation, can decide if his ideas are better for us.

First, let’s discuss his tax policy.

Along with all of the GOP front runners, Romney’s tax policy relies on supply side economics – yes, trickle down economics which even Reagan’s two top economics policy advisers have said is the wrong policy for this economic environment. We do not have a labor shortage which is what supply side economic policy intends to address: High employment causes labor shortages that causes increased labor wages which increases inflation. In other words, it is intended to combat labor shortages, thereby making it less attractive though tax policy to hire additional workers or maintain those already employed at existing wages. Supply side economics, unlike common belief, was not first introduced by Ronald Reagan. It was introduced in Great Britain during the 1800s…where it failed miserably and was disregarded as a failed policy until Reagan’s advisers resurrected it in the 1980s.

Moreover, it was not Reagan’s supply side economics, which his main economics advisers have said failed, it was Federal Reserve Chairman’s Paul Volker’s interest rate changes that crushed inflation. However, we are not dealing with crushing inflation. Inflation has been steady at 2% or less, often dropping into deflation: a drop in prices as noted by current wage and housing prices. One cannot take current commodity prices – milk, bread and gas – into these figures on inflation because they are too subject to short term events such as weather, riots, etc.

So, history tells us that supply side, trickle down economics – an economics policy that shifts greater economic gains upwards towards the most wealthy – does not work to the greater economic good of a country. Yet, this failed policy is exactly what each and every GOP presidential candidate intends. Moreover, each one of them goes much further than GW Bush in advocating decreased taxes on the highest income earners. While Romney’s tax plan offers the least redistribution upwards of the other top tier candidates, it none the less reduces the tax burden on the top income earners while increasing the tax burden on lower income earners. Top income earners will see a tax decrease amounting to as much as $286,000 annually while lower incomes earners will see their taxes rise by over $4,000.

Romney tax plan

“As the Congressional Budget Office noted in a recent report, the top 1 percent of families saw a 278 percent increase in their real after-tax income from 1979 to 2007, while the middle 60 percent had an increase of less than 40 percent.”

Yet, Romney’s tax plan makes those conditions even worse. What his tax does is to make permanent the existing Bush tax cuts and then decrease the top tier tax brackets liability even further. To make up for this supply side push towards giving the already extremely wealthy minority a further income tax break, he intends to tax lower income brackets at higher or, in some cases, existing rates. Consequently, if you’re in a middle or lower income bracket, you’ll likely see your taxes increase while those in very high income brackets will see their taxes decrease.

We must all remember that the original intent of tax policy was that it was intended as a moral, even Puritan, document: those that have most owe more to society – the commons which is all of us and our nation – as a consequence of their good fortune.

Romney’s tax plan utterly fails to adhere to that original intent.

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Written by Valerie Curl

January 13, 2012 at 9:40 AM

One Response

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  1. Don’t be so sure it will be Romney…

    It might, but I hope not. He’s a progressive, not a conservative. He’s too slick, & he wants it too badly!

    fs

    Swemson

    January 13, 2012 at 4:25 PM


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