Mitt Romney and his campaign provided Democrats yet another dramatic contrast point last week with their feeble response to the nonpartisan Tax Policy Center’s analysis of the Romney tax plan.
While the center tried mightily to make Romney’s promises to extend the Bush tax cuts for everyone, lower marginal tax rates by 20 percent, eliminate the alternative minimum tax, estate taxes and taxes on investment income for most taxpayers, — without adding to the deficit — add up, they just couldn’t.
The center even tested the plan using a model developed in part by one of Romney’s economic advisers, but because the amount of tax cuts for millionaires and billionaires is larger than all of their tax expenditures, the resulting $360 billion in lost revenue would require tax breaks that impact lower- and middle-income Americans in order to make up for the loss.
Romney Tax Plan Squeezes the Middle Class
The center’s analysis showed that under the Romney plan, people making $1 million or more annually would receive an average tax cut of $87,000, while people making less than $200,000 would see a tax increase of as much as $2,000. As with most questions or issues raised this campaign cycle, Team Romney was unprepared or unwilling to respond with any specifics, instead resorting to their constant whine about liberal biases. That lack of substance in their response further suggests — as with the issue of Romney’s own tax returns — a devil hiding in the details.
While the Republican nominee for president was defending his tax increase on the middle class, President Obama and Democrats were fighting for a middle-class tax cut that would cut taxes for those making up to $250,000 in income a year, while reasonably requiring millionaires and billionaires return to a tax rate at which they can still have plenty. From Sen. Mitch McConnell (R-Ky.) to House Speaker John Boehner (R-Ohio) to Republican National Committee Chairman Reince Priebus, Republicans have said their party will now take its policy cues from its presidential nominee.
Between now and Election Day, every Democratic candidate up and down the ballot should call on his or her Republican opponents to defend the GOP plan to increase taxes on middle-class Americans, or admit this is merely an attempt to re-package the snake oil that is supply-side, trickle-down economics. The contrast could not be more clear: under Romney and the GOP, taxes for middle- and lower-income Americans would increase while taxes for millionaires and billionaires would decrease. Under Obama and Democrats, middle-class Americans would get a tax cut.
The Romney plan is yet another version of the failed idea that cutting taxes on the wealthiest Americans will result in investment that trickles down throughout our economy. As the Center for American Progress pointed out last week in a series of graphs analyzing 30 years of economic data, “by every important measure, our nation’s economic performance after the tax increases of 1993 significantly outpaced that of the periods following the tax cuts of the early 1980s and the early 2000s.”
As they illustrate, during these periods investment growth was weaker, wages stagnated, economic growth was slower, productivity growth was slower, hourly earnings were flat or declined and our nation’s fiscal health declined overall.
Romney should know himself that there are limits to the impact that government can have on influencing private-sector behavior. Most corporations, like most people, will do everything they can to avoid their tax obligations, even hiding accounts offshore if possible.
Posted: Tuesday, 7 August 2012