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Study: Romney’s Tax Plan Hits Middle Class

The effect of Romney's plan

Knowing all that, the Tax Policy Center, a joint project of the Urban Institute and Brookings Institution that evaluates tax proposals submitted by presidential candidates, examined the effect of Romney’s tax rate cuts combined with the elimination of several common tax deductions. Those include the mortgage interest deduction, charitable giving deduction and the exclusion for health insurance. The center published its findings on Aug. 1, 2012.

To try and keep with Romney's guiding principles, the authors eliminated deductions and write-offs -- starting with the deductions for top earners first -- until they came up with enough revenue to offset the $360 billion in tax cuts that are part of Romney's plan.

They determined that people who earn $1 million or more in taxable income would see an average net tax decrease of $87,117. They’d save $175,961 from Romney's tax cut, but lose $88,444 in deductions.

"They would still get a tax cut," said Adam Looney, one of the authors. "The dollar value of the tax cuts is just way bigger than the mortgage interest and other deductions. There’s no way to implement this plan in a way that doesn’t result in a pretty big tax cut for that group (those making more than $1 million)."

People who earn between $500,000 and $1 million would see a cut of about $17,000, and taxes for people with incomes between $200,000 and $500,000 would decrease by about $1,800, the study found.

But to make Romney's plan revenue neutral, deductions would also have to be removed for people with incomes below $200,000, and the effects of that would be significant, the study found. In fact, the elimination of the deductions would mean outright tax increases for everyone with incomes below $200,000. People with taxable income between $50,000 and $75,000, for example, would see an average net tax increase of $641. They’d save $984 from Romney's rate cut, but lose $2,672 in write-offs.

The authors specifically noted that taxpayers with children whose income is below $200,000 would see their taxes go up by an average of $2,041 -- the figure highlighted in Obama’s ad.

The reason for the increase is that the most popular tax breaks heavily benefit middle- and lower-income families, the 95 percent of the population earning less than $200,000 who carry mortgage debt and use employer-provided health insurance.

And though Romney has suggested he would focus on taking the deductions away from the wealthy, the study concluded that alone would not make up the difference of the revenue sacrificed when rates are slashed.

"Somebody has to foot the bill for those tax cuts," Looney said. "You have to tap into middle- and lower-income households."

Bottom line: the study found that Romney couldn't keep all his goals based on what we know about his plan."
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http://www.politifact.com/truth-o-m...ma/obama-romney-would-cut-millionaires-taxes/
 
the problem with this study is that it fails to factor in the economic growth that would occur due to the changes being made to tax rates. that economic growth would increase the tax base, thus bring in more taxes. I've never seen a single economist say that removing taxes on investment incomes of less than 200k, would NOT increase economic growth. The invested money WOULD create growth and jobs.

The other problem with the study is that it doesnt factor in the confidence businesses would have in expanding with obama gone. obama creates too much lack of certainty on too many things for businesses to feel safe in expanding. liberals don't like to hear that, but it is true. I have many friends that own small businesses and they don't pay attention to politics. when i ask them how things are going, if they are hiring etc. they always say stuff about the tax rates might change, they don't understand how much the healthcare law will cost them, and i even have one friend that has some kind of problem with the dodd frank bank law. (dont know much about it, so no idea what that has to do with anything.)
 
jdxprs said:
the problem with this study is that it fails to factor in the economic growth that would occur due to the changes being made to tax rates. that economic growth would increase the tax base, thus bring in more taxes. I've never seen a single economist say that removing taxes on investment incomes of less than 200k, would NOT increase economic growth. The invested money WOULD create growth and jobs.

The other problem with the study is that it doesnt factor in the confidence businesses would have in expanding with obama gone. obama creates too much lack of certainty on too many things for businesses to feel safe in expanding. liberals don't like to hear that, but it is true. I have many friends that own small businesses and they don't pay attention to politics. when i ask them how things are going, if they are hiring etc. they always say stuff about the tax rates might change, they don't understand how much the healthcare law will cost them, and i even have one friend that has some kind of problem with the dodd frank bank law. (dont know much about it, so no idea what that has to do with anything.)
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Growth and taxes have no correlation.
 
CONSagainROMNEY said:
There is actually only a small minority of people who are fooled by Romney. No one can be that dumb. Which is why he has the lowest poll numbers in terms of likability of any POTUS candidate in over a hundred years!
He is not electable. And he does not represent the true spirit of the Republican Party. Which is why all HONEST Republicans need to vote for someone else.
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what is really pathetic is watching a far left obama supporter pretending to be a conservative
 
CONSagainROMNEY said:
There is actually only a small minority of people who are fooled by Romney. No one can be that dumb. Which is why he has the lowest poll numbers in terms of likability of any POTUS candidate in over a hundred years!
He is not electable. And he does not represent the true spirit of the Republican Party. Which is why all HONEST Republicans need to vote for someone else.
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Not sure that the Obama campaign staff knows what the "true spirit of the Republican Party" is. Why not talk about the folks in your campaign Axelrod and Plouff who has taken money from an Irianian company then joined the white house.
 
jdxprs said:
the problem with this study is that it fails to factor in the economic growth that would occur due to the changes being made to tax rates. that economic growth would increase the tax base, thus bring in more taxes. I've never seen a single economist say that removing taxes on investment incomes of less than 200k, would NOT increase economic growth. The invested money WOULD create growth and jobs.

The other problem with the study is that it doesnt factor in the confidence businesses would have in expanding with obama gone. obama creates too much lack of certainty on too many things for businesses to feel safe in expanding. liberals don't like to hear that, but it is true. I have many friends that own small businesses and they don't pay attention to politics. when i ask them how things are going, if they are hiring etc. they always say stuff about the tax rates might change, they don't understand how much the healthcare law will cost them, and i even have one friend that has some kind of problem with the dodd frank bank law. (dont know much about it, so no idea what that has to do with anything.)
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It actually does account for growth. The cut in business tax it assumes would be entirely offset by increased growth(though this was done partly simply because no one has any accuracy in determining growth caused by business tax cuts). As far as growth from the income tax changes:

In addition, we also assess whether these results hold if we assume that revenue reductions are partially offset by higher economic growth. Although reasonable models would show that these tax changes would have little effect on growth, we show that even with implausibly large growth effects, revenue neutrality would still require large reductions in tax expenditures and would likely result in a net tax increase for lower- and middle-income households and tax cuts for high-income households.

...

Nevertheless, even if one were to use the model from Mankiw and Weinzierl (2006) and assume that after five years 15 percent of the $360 billion tax cut is paid for through higher economic growth, the available tax expenditures would still need to be cut by 56 percent; on net lower- and middle-income taxpayers would still need to pay higher taxes.
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http://www.brookings.edu/~/media/research/files/papers/2012/8/01%20tax%20reform%20brown%20gale%20looney/01%20tax%20reform%20brown%20gale%20looney.pdf
 
TurtleDude said:
what is really pathetic is watching a far left obama supporter pretending to be a conservative
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Maybe the 'CONS' in his name isnt short for conservatives but for convicts.
 
TheDemSocialist said:
Growth and taxes have no correlation.
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This is not true. However, it is strongly possible that we have reached a point of major diminishing returns in growth on tax cuts.
 
TurtleDude said:
what is really pathetic is watching a far left obama supporter pretending to be a conservative
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Or people whose only argument is to attack the other poster.
 
Redress said:
This is not true. However, it is strongly possible that we have reached a point of major diminishing returns in growth on tax cuts.
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You know, I think there is some truth to that. I also think we have reached a point of diminishing returns on stimulus and FED action as well. Might be time to just let the economy fix itself--which it can and will do, if allowed--and stop all the state action whose consequences will be worse than its benefits.
 
Fletch said:
You know, I think there is some truth to that. I also think we have reached a point of diminishing returns on stimulus and FED action as well. Might be time to just let the economy fix itself--which it can and will do, if allowed--and stop all the state action whose consequences will be worse than its benefits.
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Less evidence in those two cases to support it. The last stimulus worked, it will be interesting to see how the one passed lat month does. Fed actions really are unlikely to suffer diminishing returns in the same way.
 
If the truth be told, there aren’t enough facts being presented by Romney on his tax plan for anyone to say anything about, let alone make a valid argument about one way or the other.

What has happened is the left has seen another Obama add, deemed it to be law, as their ruler would never lie to them, and are now carrying the torch to reach the far edges of the world with what their savor has told them to be true. With Obama as their Shepherd, the sheep will follow blindly.
 
The Barbarian said:
If the truth be told, there aren’t enough facts being presented by Romney on his tax plan for anyone to say anything about, let alone make a valid argument about one way or the other.

What has happened is the left has seen another Obama add, deemed it to be law, as their ruler would never lie to them, and are now carrying the torch to reach the far edges of the world with what their savor has told them to be true. With Obama as their Shepherd, the sheep will follow blindly.
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Partly true. WIth the generalities, it allows people to make various different models. However, more specifics lets them same modelers make more accurate predictions, which won't gain votes. There is a limit to what you can do. If you don't make the tax changes revenue nuetral you open yourself up to charges of making a plan to increase the deficit. If you specify what deductions are eliminated, you piss off any one taking that deduction, if you offset revenue loss with spending cuts, you piss off those who support those problems(this is especially bad since he wants to increase significantly military spending).
 
Redress said:
Or people whose only argument is to attack the other poster.
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Just pointing out the obvious. The Poe force is strong with that one. WE get some social fascists were upset that if romney wins, Gays aren't going to be flayed alive or abortion doctors won't be impaled on stakes. But when we see someone constantly whining about Romney, its pretty obvious they are obama supporters now
 
Fletch said:
You know, I think there is some truth to that. I also think we have reached a point of diminishing returns on stimulus and FED action as well. Might be time to just let the economy fix itself--which it can and will do, if allowed--and stop all the state action whose consequences will be worse than its benefits.
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we have long passed the point where any good comes from a greedy wasteful government getting MORE of our money
 
Redress said:
Less evidence in those two cases to support it. The last stimulus worked, it will be interesting to see how the one passed lat month does. Fed actions really are unlikely to suffer diminishing returns in the same way.
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The last stimulus cost $278,000 per job. So we could employ the 12.8 million unemployed people at that rate for a mere $1,638,400,000,000.00. I'm not quite sure we can call that a success.
 
Redress said:
Less evidence in those two cases to support it. The last stimulus worked, it will be interesting to see how the one passed lat month does. Fed actions really are unlikely to suffer diminishing returns in the same way.
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If you are talking about the QE programs, most would say that the first worked a lot and was necessary to keep the economy afloat. The second was viewed by many if not most as having materially less impact, while "operation twist" has had little effect. When 10 year treasuries have a 1.5% rate and mortgages are running under 4%, lowering interest rates will have little effect on the economy. My guess is that if the Fed makes another move later this year it will be some type of unconventional policy or buying up more MBS and then letting the government lower the principle on some of the debt they hold.
 
Keridan said:
The last stimulus cost $278,000 per job. So we could employ the 12.8 million unemployed people at that rate for a mere $1,638,400,000,000.00. I'm not quite sure we can call that a success.
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$278K seems cheap when compared to what Obama's political guru charges Iran for a speech. He would make that in a week at 100K a pop to the Iranian government companies.

Maybe we should see which is a better way to make money Private equity or selling Political Influence to Iranian companies.
 
washunut said:
$278K seems cheap when compared to what Obama's political guru charges Iran for a speech. He would make that in a week at 100K a pop to the Iranian government companies.

Maybe we should see which is a better way to make money Private equity or selling Political Influence to Iranian companies.
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I honestly don't follow the comparison...
 
Keridan said:
I honestly don't follow the comparison...
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Good catch as there is none. Just taking a shot at the knucklehead Plouffe and Obama for him working it seems for the Iranian government at a time Obama has all these sanctions on them.
 
Romney's tax plan benefits the rich? Really? Go figure! :blink:
 
Redress said:
PolitiFact Wisconsin | Stimulus jobs cost taxpayers $278,000 each, GOP committee says in claim against Dem Wis. Rep. Ron Kind

Really, fact checking is your friend.
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The fact that the money went to other things, too, doesn't change that the status report from Obama's advisers claimed 2.4 million jobs were added or saved (I question that figure). The goal of the stimulus was to improve the economy. $666 billion was spent on that goal. 2.4 million jobs was the claimed success. Whether the stimulation was supposed to be a direct result of hiring or because taxes were lowered to increase demand is largely irrelevant. You don't think they were quick to calculate the net effect of that increased demand in their figure of 2.4 million?

For every $278,000 spent in that stimulus, 1 job was created according to the numbers given by a report from Obama's advisers. Now, if they feel they can do better the next time around, I'd be interested in hearing the details. When unemployment is on the rise, despite not counting tons of folks and numbers don't seem to be getting much better, I think any additional government spending needs to show a better ratio on those two figures.
 
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