Romney has been touting a 2006 tax plan that he says proves his plan will work, according to a report in Roll Call.
According to the study (pdf), tax reform that eliminates deductions and loopholes and reduces income tax rates will slightly increase economic growth over a decade. But the study assumes that nearly all middle class tax breaks — including those for children, mortgages, and employer contributions for health care — are repealed in their entirety:
Under the proposal, all personal exemptions, itemized deductions, personal credits except for the earned income credit, and all above-the-line adjustments to income except for retirement savings deductions and the deduction for self employment taxes would be repealed. The largest categories of deductions repealed are present-law deductions for home mortgage interest expenses, State and local taxes, and charitable contributions. In addition, the exclusions for certain employee fringe benefits, such as employer contributions for health and life insurance, would be repealed. The standard deduction would remain.
The study also found that such a plan would result in the “redistribution” of income tax liability from high-income earners to the middle class. In other words, the tax liability of high income earners would go down while middle income earners tax liability would go up, thus causing a greater transfer of wealth to high income earners. In addition, the promised job growth is only between 1 and 2 percent over ten years (one to two million jobs), while Romney promises that his tax plan will create seven million jobs over four years.
Personally, I still haven’t figured out how he (or the GOP) plans to deal with the following issues when they want to reduce tax rates and maintain revenue neutrality at 20% of GDP:
1) Over the next 10 years the Boomer generation will retire, requiring the federal government to expend up to 24% of GDP and causing either more borrowing or an increase in revenues;
2) We have a huge deficit and debt that needs to be paid down requiring even more revenues than currently exists or the average historic 20% of GDP;
3) Although Romney has not said as much, it’s not an impossible assumption that he agrees with the House GOP that most government functions and programs should be eliminated and dramatically reduced, including product, financial, food and consumer safety; criminal enforcement and policing; transportation and transport safety; health and health research; education; weather prediction, and basic research. The only way for Romney to accomplish revenue neutrality at 20% is to reduce government spending by approximately $5 trillion over ten years. Doing so means eliminating or dramatically cutting back most everyday services we all rely upon that most people don’t even realize are a result of government spending.
Certainly, no one wants to pay more in taxes, but we do have serious fiscal issues with which to deal…and lowering revenues with more tax breaks won’t solve those fiscal issues.
Nevertheless, remember is quote from the legendary political philosopher Adam Smith, in 1776: “The subjects of every state ought to contribute towards the support of the government, as nearly a possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.” – The Wealth of Nations, Adam Smith, 1776.
If you, as Dems and Independents, care about our country and our people as a whole, then you need to vote in this election. Don’t let this election be bought and don’t let it be given away to special interests because of your apathy. VOTE your ethics and moral beliefs.