Tax Policy Center: Romney’s Plan Cannot Do What it Claims

A recent New York Times, Business Day Report by Annie Lowrey stated, “An August study by the Washington-based Tax Policy Center , a respected nonprofit that issues studiously detailed tax analyses…concluded that Mr. Romney’s plan, on its face, would cut taxes for rich families and raise them for everyone else.”

The fallout over the Tax Policy Center report “did just what the center was created to do: inject some solid numbers into a shifty, accusatory, raucous political debate. The decade-old center — a joint project of the Brookings Institution  and the Urban Institute, two nonpartisan grandes dames of the Washington world — was founded precisely to “fill that niche,”” said Mr. Donald Marron, the “center’s director, and a former Bush administration economist.”

William G. Gale of the Brookings Institution, one of the paper’s main authors, in a recent interview said, “We wrote a technical, accurate paper given the available information. The criticism that you can’t analyze the Romney tax plan because there isn’t one? That hasn’t stopped other economists from analyzing its growth effects. I like to have substantive discussions about tax policy. The uproar about the paper has not been substantive.

Many economists across the political spectrum have said they found the report’s conclusions convincing, like Alan D. Viard, a tax expert at the right-of-center American Enterprise Institute.

Mr. Sullivan of Tax Analysts said: “I like tax reform. I want to broaden the base. It’s something I’ve devoted my life to. And I welcome Governor Romney and the Republicans’ strong push, but the plan doesn’t work out. It’s not mathematically possible.””

An excerpt from the twenty page report, On the Distributional Effects of Base-Broadening Income Tax Reform, authored by Samuel Brown, William Gale, and Adam Looney Urban-Brookings Tax Policy Center August 1, 2012, states:

“Absent any base broadening, the proposed reductions in individual and estate taxes specified in Governor Romney’s plan would decrease federal tax revenues by $360 billion in 2015.7 These tax cuts predominantly favor upper-income taxpayers: Taxpayers with incomes over $1 million would see their after-tax income increased by 8.3 percent (an average tax cut of about $175,000), taxpayers with incomes between $75,000 and $100,000 would see somewhat smaller increases of about 2.4 percent (an average tax cut of $1,800), while the after-tax income of taxpayers earning less than $30,000 would actually decrease by about 0.9 percent (an average tax increase of about $130) due to the expiration of the temporary tax cuts enacted in 2009 and extended at the end of 2010.”

If relief for middle class wage earners was the purpose of economic restructuring and tax reform, then it would make sense for that group to show the largest gains. Yet those making high-end incomes over $1 million are gaining a 5.9% greater benefit than the middle-income earners, and a 7.4% gain over lowest income earners.  This only serves to widen the economic gap.  An open political discourse is so far removed from the average American, and facts are convoluted by smoke and mirror arguments.  I’d like to see greater transparency and a common language so that all the stake holders affected by policies, which is every American,  especially the care-takers for those who are unable to vote, have a clear understanding of what is at stake and can use informed decision-making when asserting their right to vote. Being swayed by hype, and rhetoric and alarmist rants or union pressures that are mainly self-serving doesn’t help move our country forward.  We hear much about nation-building. How about building our nation up, instead of digging deeper and deeper divides between groups of Americans?