Study: Romney tax plan would shift burden toward poor
by LiberatedWoman
 Study: Romney tax plan would shift burden toward poor
Aug 01, 2012 | 564 views | 2 2 comments | 31 31 recommendations | email to a friend | print | permalink

Mitt Romney's tax plan would provide large tax cuts to the very wealthy, while increasing the tax burden on the lower and middle classes, according to a study released Wednesday.  The report -- produced by researchers at the Urban-Brookings Tax Policy Center -- illustrates just how difficult it would be to recoup government revenue lost under Romney's plan.

The presumptive Republican presidential nominee's tax plan calls for 20% cuts to today's Bush-era income tax rates.  He would also eliminate the Alternative Minimum Tax.  Those tax cuts would lead to a sharp decline in government revenue.

Yet Romney insists he will make up the difference in-part by limiting deductions, exemptions and credits currently available to top-level income earners.  Romney refuses to say which tax breaks he plans to eliminate -- but the Tax Policy Center report indicates the plan would force the tax burden to shift toward lower and middle-class Americans.

"A revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed ... would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers," the report concludes.  According to the study, the Romney tax cuts would produce a $360 billion revenue loss in 2015, and offsetting that would require a reduction of 65% of all available tax expenditures.  Such popular tax breaks include deductions for mortgage interest and state income taxes, the exclusion from income of employer-paid health insurance and lower tax rates on capital gains.

"Such a reduction by itself would be unprecedented, and would require deep reductions in many popular tax benefits," the report said.  And because most tax breaks go to the poor and middle class, "maintaining revenue neutrality mathematically necessitates a shift in the tax burden of at least $86 billion away from high-income taxpayers and onto lower- and middle-income taxpayers."  The end result is that individuals who make less than $200,000 would actually have to pay $500 more, on average, in taxes -- a 1.2% decrease in after-tax income, the study found.  Meanwhile, the after-tax income of individuals who make more than $1 million would increase by 4.1%.

The Romney campaign disputed the findings of the study, arguing that the analysis was flawed because it did not account for additional revenue that would result from a reduction in the corporate tax rate -- another part of Romney's plan.  "Ignoring the growth effects of corporate tax reform discredits the Tax Policy Center immediately," a Romney campaign spokesperson said.  "By not including the substantial growth effects of the corporate side [of] reforms, the entire study is based on flawed assumptions," the spokesperson added.

So a reduction in the corporate tax rate is somehow going to put hands into the poor?  Does anybody expect Walmart to hand out pay raises to their employees if their taxes are reduced?  This is another example of the flawed “trickle down” theory that Republicans have pushed for three decades and one of many reasons why Willard doesn’t belong in the White House.

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August 02, 2012
First of all FedUp, the Brookings institute is about as middle of the road think tank as we have, especially compared to the Heritage foundation or anything written by Grover Norquist. I read this from the National Review, which most consider conservative. They aren't too impressed by Romney's plan either, but cop out with once elected Congress might fix it up a little.

I quote the National Review: Depending on how they (tax rates) are structured, they could amount to increases in the effective marginal tax rate even as statutory marginal rates drop.

We have two major concerns about the plan. The first is its effect on the deficit. For decades, we have favored aggressive tax reduction even in the face of concerns about the deficit, but the magnitude of today’s deficits and of tomorrow’s projected deficits are much larger than those that Ronald Reagan (Created by Reagan) or George W. Bush (Created by Bush) faced upon taking office. Voters also, and therefore, seem more concerned about the issue than they were then. Romney rather vaguely promises that spending restraint and increased growth will keep these tax cuts from increasing the deficit — a promise that comes on top of vague promises to cut spending enough to reduce the deficit we already have.

Second, the plan breaks with the party’s emerging consensus that families bear a disproportionately heavy part of the tax burden. The plan would leave parents paying a slightly higher proportion of the tax burden than they already do. This was a large missed opportunity.

It is especially a missed opportunity when you consider the structure of Romney’s tax plan. Cutting the bottom tax rates from 10 and 15 percent to 8 and 12 percent accomplishes almost nothing while forgoing a lot of revenue. Someone paying the lowest rate will see his incentives improve a measly 2/90ths, or 2.2 percent. But most of the money taxed at the lowest tax rate is made by higher earners as they pass through that tax bracket. The reduction in the lowest tax rate lowers their tax bill without altering their marginal rates, and thus their incentives, at all.
August 02, 2012
This "Independent,Non-Partisan Study" was written by former Obama staffers and close allies of Obama and frequent visitors to the White House. This is what I expect to come out of the liberal Brookings Institution and and Obama's liberal mouth.