Mitt Romney Tax Plan: Study Shows Deduction Caps Don't Pay For Tax Cuts

Discussion in 'Politics' started by Free Thinker, Oct 18, 2012.

  1. righties who whine about deficit spending have to use cognitive dissonance to support romney on his tax cuts. but they are used to that:

    WASHINGTON, Oct 17 (Reuters) - Mitt Romney's proposed cap on itemizing tax deductions could not on its own raise enough new government tax revenue to compensate for revenues lost by the Republican presidential candidate's plan to slash income tax rates, a think tank said on Wednesday.

    The Tax Policy Center, a nonpartisan group that has weighed in on other Romney proposals, said his deductions cap could raise up to $1.7 trillion over 10 years. The center said earlier this year Romney's 20-percent tax rate cut would cost $4.8 trillion.

    The former Massachusetts governor has argued that his plan will not cost $4.8 trillion. At a debate on Tuesday with Democratic President Barack Obama, Romney reiterated that he would pay for his tax cut proposal by capping tax deductions by a set dollar amount. Taxpayers could choose their deductions under the cap, such as the home mortgage interest and charitable donation write-offs, among others, he said.

    "I'm going to bring rates down across the board for everybody, but I'm going to limit deductions and exemptions and credits, particularly for people at the high end," Romney said at the debate in Hempstead, New York.

    The Tax Policy Center acknowledged its latest estimates were based on an incomplete picture of Romney's tax plan.

    "The Tax Policy Center has again inserted their own assumptions in order to reach a biased conclusion," a Romney campaign spokeswoman said on Wednesday.

    The Romney campaign had previously criticized the Tax Policy Center's estimates, saying they did not account for economic growth that can pay for tax cuts and that the center excluded some tax breaks in their studies.

    The campaign has said the limit on itemized deductions would be only part of its plan to fund the rate cut. For instance, it would also revamp the tax treatment of healthcare, which now comes in the form of an exclusion when health insurance is workplace-based.

    Romney has shifted the dollar amount taxpayers might be able to deduct. "I'll pick a number - $25,000 of deductions and credits, and you can decide which ones to use," he said.

    Romney earlier this month floated a cap on deductions set at $17,000. His campaign later said that proposal is one of a range of options. Romney has also said $50,000 could serve as the cap.

    The higher the cap, the less money Romney's tax plan could raise to offset tax rate cuts, the center's estimates show.

    A cap of $17,000 would raise $1.7 trillion over 10 years while the $50,000 cap would raise only $760 billion. If Romney eliminated all itemized deductions, his plan could raise $2 trillion over 10 years, the center has estimated.

    Obama has called for a cap on itemized deductions of 28 percent of adjusted gross income for individuals earning more than $200,000 a year and families earning more than $250,000.
  2. jem


    ad in growth.

    remember after Ws tax cut in 2003 tax revenues soared 44%.
  3. I think Obama had it right when he asked Romney if Romney himself would fall for the nonsense about Just Trust Me until after the election. Nothing of substance. Of course Romney couldn't or wouldn't answer. As in any business, you have revenues and costs, gotta work on both all the time. And, no, neither candidate has put forth a great plan as of yet.
  4. Quick Google: The Washington Post, October 17, 2006:
    "Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," said Alan D. Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute. "It's logically possible" that a tax cut could spur sufficient economic growth to pay for itself, Viard said. "But there's no evidence that these tax cuts would come anywhere close to that."
    Economists at the nonpartisan Congressional Budget Office and in the Treasury Department have reached the same conclusion. An analysis of Treasury data prepared last month by the Congressional Research Service estimates that economic growth fueled by the cuts is likely to generate revenue worth about 7 percent of the total cost of the cuts, a broad package of rate reductions and tax credits that has returned an estimated $1.1 trillion to taxpayers since 2001.
  5. Ricter


    Thanks to a bubble.
  6. Contrary to the Romney campaign's promises, a former economic adviser to President Ronald Reagan says that Mitt Romney's tax plan just won't revive the economy.

    "The idea that tax reform will jump-start an economy suffering from the after-effects of a cyclical downturn is nonsense," Bruce Bartlett wrote in a New York Times blog post on Tuesday. "There is little reason to think we will see tax reform any time soon, and even if Mr. Romney’s plan is enacted as proposed the growth effect will be small to nonexistent."

    Barlett noted that the economy continued to grow at roughly the same rate after Reagan's own tax reform in 1986, adding that economists agree Reagan's 1986 tax reform had little impact on economic growth. Bartlett also wrote last year that tax cuts for the wealthy and for corporations did not help stimulate the economy under President George W. Bush, and that "there is no reason to believe" that the same policies would help stimulate the economy today.
  7. jem


    all this garbage from people with slanted viewpoints can not change the facts

    Revenues went up 44% after the 2003 tax cut. There were lots clowns saying that would not work either. Same for Reagan and I am sure the same happened with Kennedy and Melon. Leftist pefer their grand delusion to reality.

    If you want to see the bush numbers just go back a few pages.

    Revenues went down during the mortgage crises and have stayed down despite enormous spending.

    Keynes stated to fix a stalled economy cut taxes.
    Lets follow Keynes not Krugman.

  8. tax cuts for the rich dont grow revenue. they transfer it. transfer debt onto government and dollars into the pockets of the rich.
    exactly what bush did.
  9. Business grows from demand for their product or services, not from paying less in taxes. Employment grows from demand for their products or services, not just hiring people for the hell of it. We have no demand if the middle class has no money to buy products or services. This is simple - not trickle down, simple supply and demand.
  10. jem


    investments in new innovative products and services are made based on projected after tax returns.

    A recession happens because there is no longer demand for the previous mix of good and services. Most likely because of over capacity and mis allocated capital.

    Govt spending on existing companies is not an effective way to stimulate the demand which can lead to a growth in jobs.

    You have to encourage new innovative goods and services.
    You do that by cutting taxes.
    Investors look at projected after tax returns.
    Tax cuts make those investments more attractive.

    That is why Keynes (contrary to leftists like Krugman) said in a recession, cut taxes.

    #10     Oct 18, 2012