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The Romney Tax Plan in Short Form

Among the myriad dubious claims associated with last week's first presidential debate was that Republican candidate Mitt Romney's “tax plan” is too mathematically complicated and too conceptually abstruse to explain to ordinary voters in the mere 90 minutes of TV time (about a half-hour longer than Bill Clinton's entire speech at the Democratic convention) allotted to the debate.

But, being an ordinary voter, I thought I might try anyway. First, disregarding Romney's ludicrous insistence that he has never mentioned any such scheme (there's hours of video to refute this whopper), he has repeatedly promised us a 20-percent reduction across the board in federal income tax rates. According to dozens of economists and analysts, and a report from the scrupulously nonpartisan Tax Policy Center, this cut adds up to $4.8 trillion in lost tax revenue over a 10-year span. Everyone would see their taxes go down, but the biggest beneficiaries, taxpayers in the very top percentiles, would average $251,000 a year in savings.

Romney insists that this plan would be “revenue neutral” — he would recover $480 billion a year for 10 years — thanks to a number of unspecified draconian cuts in federal spending and the closing of unspecified deductions and loopholes now in the tax code. However, immune to Romney's cuts would be Social Security, Medicare, and the Department of Defense. The Pentagon, under Romney would actually receive bonus spending totaling $2 trillion over 10 years, increasing the up-front cost of a hypothetical Romney presidency to a minimum of $7 trillion, before the unspecified savings kick in.

The mathematics that President Obama attempted, rather elliptically, to introduce into the debate included the broadly accepted fact that there isn't enough money in the federal government's discretionary budget to accomplish $480 billion in annual reductions even after slashing virtually every deduction in the tax code.

The difficulty with “loophole” surgery is illustrated simply by listing the four biggest categories of deduction on itemized federal income tax forms. These are deductions for a) home mortgages; b) state and local taxes paid; c) medical expenses; and d) charity. The Tax Policy Center has estimated that even with a drastic program of eliminating deductions and slashing federal spending, Romney's tax plan would require about $86 billion a year to achieve “revenue neutrality.”

The only conceivable way to make up that fairly dark shadow between the idea and the reality is to tap the most reliable and abundant source of spare change, the taxpayer. But not every taxpayer: Romney, among his very rare specific promises, has guaranteed that he will leave untouched by the taxman his fellow “job creators,” rich people who make more than $250,000 a year. According to Romney and running mate Paul Ryan, the constantly increasing prosperity of the rich must be encouraged, so that their excess wealth will continue to spill over the rims of their metaphorical pots of gold and rain down on the lower classes like pennies from Heaven.

Not coincidentally, the extremely affluent are the same demographic group that would pay higher taxes under President Obama, who may harbor the suspicion that plutocrats like Romney, rather than creating jobs for the so-called “47 percent,” prefer to squirrel it away in gigantic carried-interest, tax-free Individual Retirement Accounts in nameless Caribbean banks and secret Swiss vaults.

By all these calculations, according to the Tax Policy Center and other equally adept practitioners of multiplication and long division, the necessary cost of Mitt Romney's 20 percent blanket tax-rate reduction and Defense Department expansion — equaling some $7 trillion over the next decade — would come to at least $2,000 for every wage-earning, non-job-creating (under $250,000 a year) taxpayer. This $2,000 might be a larger number if Romney kills the deductions for mortgages, state and local taxes, charity, medical expenses, dependents, etc.

In sum: The rich would pay nothing for Mitt Romney's tax plan. The poor, probably, would pay nothing. The middle-class, definitely, would get the bill. That's the whole explanation of the Romney 20 percent tax plan. It comes to 654 words. Reading time: 4 minutes, 30 seconds.

OK then. It turns out, despite alibis to the contrary, that someone could've explained the whole Romney tax plan during the debate, with 85 minutes left over for back-and-forth. Somebody — Romney, the President, or even “Silent Jim” Lehrer — should've.

2 comments on “The Romney Tax Plan in Short Form

  1. FLYINGSCOT
    October 10, 2012

    Thanks for the summary explaining all this stuff.  As ever it sounds like the middle class will bear the brunt again.

  2. Ariella
    October 10, 2012

    @Flyingscot Isn't that always the case?

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