Can someone explain Romny's tax plan?

[CJ 2.0]

Thanks for a sensible post... you can get it from the wealthy without taxing them now ... when we don't need any additional limits on what they can do. Taking it from them in the form of benefits as they grow older I and I would hope that many don't have a problem with.

What I find funny about all this, is the way they go about it. Here they want to tear Romney's plan to shreds, yet start a threat about how the Rich benefit from our tax laws ... and you'll hear so much whining and crying it pathetic. Just seems there is no way to win, you have a candidate that wants to changes some of those deductions and they still whine and cry about that .. guess with some there is just nothing you can do to please them ....... You will never be able to convince them that at this point in time raising the tax rates on the wealthy will "only" result in more income for the tax lawyers.

Because the democrats in this cycle are all about demagoguery and distortion. They have nothing to run on domestically, and have recognized this as the only path to victory.

I thought it was interesting to compare Obama's foreign policy debate to the other ones. On foreign policy, he was strong in citing and defending his record as well as setting things out going forward. Now I don't agree with lots of what he said, but that doesn't impact on the fact that he had something to say.

Now contrast that to his domestic policy debates, where all he had was telling people the past 4 years were not as bad as people thought they were and that things are getting better now even though no one can see it. That and mercilessly distort and attack Straw Man Mitt Romney.

And one of the best demogoguic devices Obama and his campaign have is Mitt Romney as the Monopoly guy, smoking cigars lit by hundred dollar bills and pillaging the poor to benefit the rich. It is a bad charicature, but it's all Obama has.

So reducing deductions for the rich = giving the rich massive tax cuts. Maintaining deductions for the middle class while cutting their tax rates = imposing on the middle class massive tax increases.

And dumping money into unions and green companies that will invariably go bankrupt are "investments".

 

[The Barbarian]

Because the democrats in this cycle are all about demagoguery and distortion. They have nothing to run on domestically, and have recognized this as the only path to victory.

I thought it was interesting to compare Obama's foreign policy debate to the other ones. On foreign policy, he was strong in citing and defending his record as well as setting things out going forward. Now I don't agree with lots of what he said, but that doesn't impact on the fact that he had something to say.

Now contrast that to his domestic policy debates, where all he had was telling people the past 4 years were not as bad as people thought they were and that things are getting better now even though no one can see it. That and mercilessly distort and attack Straw Man Mitt Romney.

And one of the best demogoguic devices Obama and his campaign have is Mitt Romney as the Monopoly guy, smoking cigars lit by hundred dollar bills and pillaging the poor to benefit the rich. It is a bad charicature, but it's all Obama has.

So reducing deductions for the rich = giving the rich massive tax cuts. Maintaining deductions for the middle class while cutting their tax rates = imposing on the middle class massive tax increases.

And dumping money into unions and green companies that will invariably go bankrupt are "investments".

I agree on the debate on foreign affairs, Obama was at his best there. Frankly I don’t give a damn, and I’m hoping that more Americans feel the same, we have enough problems right here at home to take care of. In my opinion, that is where Romney shines.

One of the reasons I don’t post a lot here, is because there is no hope of reaching anyone most here lean so hard to one side or the other, that the middle is like a foreign country to them. This election should be about the economy and jobs and nothing else.

No body cares what Romney and others like him pay in taxes if there is a job out there for them, one that has benefits and pays a wage that people can live on. The class warfare that has been waged in this country disgusts me.

Our government has been out of control, and it’s not just the Obama years, it’s been years before that. The problem I have with Obama is quit simple, he has done “nothing” to curb any of it. He has created a atmosphere where people are afraid to spend money, they are afraid to expand, most in business have taken a wait and see attitude. Government spending is just as much if not more out of control then it was when he took office. The debt of this country was just plain nuts … and he has added nearly 6 trillion to it.

You would think that most would be smart enough to know we aren’t going to get out of this just tax increases …. . Especially if you are just taking about 5% of the work force, and we are not going to get out of this by spending cuts only.
The answer is simple, moderate tax increases for everyone, spending cuts across the board and getting our government to stop spending like drunken sailors. That plus an economy that is gaining jobs , well paying jobs at a faster rate than population growth, and we might work our way out of this. But all these things must start now.
Of course that is just my opinion, and I want a leader that knows how to do these things, that has been successful at doing so, and has demonstrated that he can work to get things done by working with everyone in the house and senate. Not just with one side.

 

[head of joaquin]

I would be willing to bet that if he adds another 5 trillion dollars to our debt in 4 years ... he will be another one term president. But if your considering voting for Obama, then you sure aren't worried about anyone adding 5 more trillion to our debt are you ?

Actually most of that was Bush's debt. But if you're saying we should borrow money when rates are at historic lows and plough that into productivity by rebuilding the infrastructure neglected by Bush and his wrecking crew, yep, nows the time to do that.

 

[head of joaquin]

Haven't read through more than a few pages of this thread, so don't know if the original question was seriously addressed (i.e., it's all been snark from the pro-Obama crowd).

So while I'm not sure of all the ins and outs either, my understanding of the framework is as follows:

- 20% across the board cut in tax rates, scaled to the extent required to maintain neutrality

- scaling back (not eliminating) deductions

Not sure there is much mroe to it, unless of course you don't believe him (which is fair, just figured I would get out what he has so inarticulately proposed and people can assess on their own).

Re the first point, he said at the first debate that any tax cut would be deficit neutral and that he would not increase taxes on middle income earners. for both of these to be true, he said that the top rates would not come down all the way if that required either middle class tax hikes or an increase in deficits. Why he hasn't been more explicit about this I have no idea.

Re the second point, "eliminating deductions" has a nice ring to the fiscally conservative purist, but that doesn't seem to be what he is actually proposing. Rather, he seems to be focused on scaling back deductions based on income (in much the same way various other benefits (at least here in Canada) are clawed back with income). So, for example, he would not be eliminating a capital gains tax, but he would be scaling it back to a 0% rate on someone earning 200k and something else (no idea whether it is the full rate or something less) for people earning more than that amount.

The thing I like about this is that it is designed to have an impact on incentives to increase output (i.e., reduces marginal rates) while the reductions in deductions both do not have the opposite impact and in fact are distributively just - i.e., there is no reason why the federal government should give the same benefits to rich and poor people.

It's the same thing with the Romney medicare reform proposal. Rather than just giving everybody care worth, say, 40k (I'm making the number up since I am Canadian and this whole paying for healthcare thing is foreign to me), he gives the poor 40k worth of healthcare but the wealthy get a lesser government subsidy (no idea if it scales to zzero or not, but if we are talking distributive justice it probably should.

What I think is very interesting in all this is that Romney's proposed approach seems very much in line with left-leaning policy objectives but the right doesn't seem to have tweaked to it. Romney is proposing shifting government benefits (whether subsidies or tax breaks) to be contingent on income, such that a benefit for the poor need not also be paid for the rich. That has the incidental benefit of making new benefits more affordable, as they do not need to be paid to everyone equally, across the board.

And like I said, people can disagree on whether they think Romney actually wants to do any of this stuff or whether it is mathematically possible. Just figured someone should lay out what we are actually talking about.

The elephant in the Romney tax room is AMT. The top bracket already has most of its deductions phased out (only the charitable deduction survives AMT). So when Romney says he's going to cut the tax rates on the rich and get rid of their dedctions, he's committing intellectual fraud. The only brackets that get deductions are working people. Hell if I want him to take away my deductions.

 

[The Barbarian]

Actually most of that was Bush's debt. But if you're saying we should borrow money when rates are at historic lows and plough that into productivity by rebuilding the infrastructure neglected by Bush and his wrecking crew, yep, nows the time to do that.

Then you sir are totally nuts in your thinking, right now 20 cents out of every dollar our government takes in goes to pay the interest only on our debt. You don’t think that is too much ? You think borrowing more is a good thing ? Borrowing more then you can ever hope to pay back is never a good idea . Not for a country, or a person.

Here’s a question for you , were are we going to be if interest rates rise while we are adding more to our debt ? Oh but lets not look forward, we can keep interest rates this low forever huh ? It was just that type of thinking that got us into this mess.

You should take a close look at the housing markets, low interest ARM’s was one of the causes, and when those ARM’s went up a couple of percentage points, people lost there houses … losing our country is not a choice that most (unlike yourself) want to face.


here is a fact for you ... in 2010 we paid 164 billion dollars on our debt ... that works out to nearly 500 dollars for every man woman and child in the US just to pay the interest on our debt ... and for you ... that's not enough ???

 

[The Barbarian]

The elephant in the Romney tax room is AMT. The top bracket already has most of its deductions phased out (only the charitable deduction survives AMT). So when Romney says he's going to cut the tax rates on the rich and get rid of their dedctions, he's committing intellectual fraud. The only brackets that get deductions are working people. Hell if I want him to take away my deductions.

Excuse me ? Romney had a gross income of over 20 million dollars in 2011, the income he paid taxes on was 13.7 million, He had far more then charitable deductions (2.25million)

 

[Mithros]

Excuse me ? Romney had a gross income of over 20 million dollars in 2011, the income he paid taxes on was 13.7 million, He had far more then charitable deductions (2.25million)

Where do you get that number?

 

[Mithros]

I agree on the debate on foreign affairs, Obama was at his best there. Frankly I don’t give a damn, and I’m hoping that more Americans feel the same, we have enough problems right here at home to take care of. In my opinion, that is where Romney shines.

One of the reasons I don’t post a lot here, is because there is no hope of reaching anyone most here lean so hard to one side or the other, that the middle is like a foreign country to them. This election should be about the economy and jobs and nothing else.

No body cares what Romney and others like him pay in taxes if there is a job out there for them, one that has benefits and pays a wage that people can live on. The class warfare that has been waged in this country disgusts me.

Our government has been out of control, and it’s not just the Obama years, it’s been years before that. The problem I have with Obama is quit simple, he has done “nothing” to curb any of it. He has created a atmosphere where people are afraid to spend money, they are afraid to expand, most in business have taken a wait and see attitude. Government spending is just as much if not more out of control then it was when he took office. The debt of this country was just plain nuts … and he has added nearly 6 trillion to it.

You would think that most would be smart enough to know we aren’t going to get out of this just tax increases …. . Especially if you are just taking about 5% of the work force, and we are not going to get out of this by spending cuts only.
The answer is simple, moderate tax increases for everyone, spending cuts across the board and getting our government to stop spending like drunken sailors. That plus an economy that is gaining jobs , well paying jobs at a faster rate than population growth, and we might work our way out of this. But all these things must start now.
Of course that is just my opinion, and I want a leader that knows how to do these things, that has been successful at doing so, and has demonstrated that he can work to get things done by working with everyone in the house and senate. Not just with one side.

I agree with pretty much everything you say here, except for timing.

Yes we need to cut the deficit, yes we need higher taxes for everyone, and yes we need to cut back on government benefits and entitlements... Just not quite yet.

GDP is a measure of government spending + private sector spending - trade deficit. If we cut government spending now, we'll dig ourselves right back into a recession. It's like running a business, too much debt is bad, but there's a time when you don't have much of a choice.

And Obama HAS done something. Some of the credit should go to the GOP congress as well, but Obama has cut the deficit by quite a bit.

 

[The Barbarian]

Actually most of that was Bush's debt. But if you're saying we should borrow money when rates are at historic lows and plough that into productivity by rebuilding the infrastructure neglected by Bush and his wrecking crew, yep, nows the time to do that.

Actually most of it wasn't Bush's debt .. no matter how you want to try to sell it .. History of Deficits and Surpluses In The United States

That shows the deficit year by year. But when know you aren't interested in fact .. just spin

 

[The Barbarian]

I agree with pretty much everything you say here, except for timing.

Yes we need to cut the deficit, yes we need higher taxes for everyone, and yes we need to cut back on government benefits and entitlements... Just not quite yet.

GDP is a measure of government spending + private sector spending - trade deficit. If we cut government spending now, we'll dig ourselves right back into a recession. It's like running a business, too much debt is bad, but there's a time when you don't have much of a choice.

And Obama HAS done something. Some of the credit should go to the GOP congress as well, but Obama has cut the deficit by quite a bit.

This says he hasn't cut the deficit History of Deficits and Surpluses In The United States

Right now we are over loaded with debt ... that has got to stop .. and mind you I'm not placing all the blame on Obama .. . we've had 12 years of out of control reckless spending, and Obama has not curbed that spending one bit.

 

[The Barbarian]

Where do you get that number?

I had to go two places .. this one says what he paid taxes on .
Romney Releases 2011 Tax Returns - NYTimes.com

and this one shows he actual tax return, showing a gross income of 20.9 million
Mitt Romney's 1040 tax return for 2011 - Boston.com

 

[iguanaman]

First most people won't lose their deductions because I doubt most people in the middle class take $20K total in deductions each and every year. As for the wealthy, his intent is that by lowering their rate but eliminating or capping their deductions, then it will create more revenue. Ex: If I were in the 35% range but take $200K in deductions then that 35% gets applied to a much lower Adjusted Gross or might put me in a lower than 35% rate, but if they take away the deductions and lower the rate, then I will likely pay more on the bottom line than I do under the current scheme because I am less likely to be able to drop into lower rate brackets without all those deductions/credits.

As for cap gains, it may not help the middle class everyday, but it will when property is sold or stocks and bonds are sold. There is no point putting money in a savings account as you are lucky to get 1% and that is less than inflation.

What do you mean by "dropping into the lower brackets? Everyone pays the same rates up to the cutoff points, only money greater than that cutoff is taxed at a higher rate. If the tax cuts for the top brackets are allowed to expire the 1st $250,000 of income would be taxed at the old lower rate. Only the income above $250,000 would receive the Clinton rates.

 

[Fisher]

What do you mean by "dropping into the lower brackets? Everyone pays the same rates up to the cutoff points, only money greater than that cutoff is taxed at a higher rate. If the tax cuts for the top brackets are allowed to expire the 1st $250,000 of income would be taxed at the old lower rate. Only the income above $250,000 would receive the Clinton rates.

If your gross income puts you in the top bracket, your deductions and credits can pull your adjusted income, the one you actually pay the tax on, down into a lower bracket.

 

[CJ 2.0]

The elephant in the Romney tax room is AMT. The top bracket already has most of its deductions phased out (only the charitable deduction survives AMT). So when Romney says he's going to cut the tax rates on the rich and get rid of their dedctions, he's committing intellectual fraud. The only brackets that get deductions are working people. Hell if I want him to take away my deductions.

Sorry, what's AMT? I'm guessing it is Alternative Minimum Tax, but I don't know anything about it (whether it is in place or any specific details). FYI I am Canadian so while US politics is something I find really interesting, I'm not as close to the various proposals as I would be if they were affecting my own taxes.

But to infer from what you are saying, people who are "rich" now only benefit in the US from charitable tax deductions, and none of the other deductions available to more middle class folks?

I would also say this is different from the proposal that benefits also be scaled back based on wealth. Not sure if that's part of your system too, so that, e.g., a healthcare benefit or a child related payment gets sclaed back with income. for example, here in Canada, we have a child benefits payment that is $100 per month per child from the federal government. It is taxed as income for the lower income earner in the household, so that, for example, if two people are making over 140k or so it is taxed at 46%, but the benefit itself does not scale down with income. On the other hand we do have lots of other benefits that are "clawed back" as income rises.

sorry, just need a bit more information about your system in order to meaningfully engage on the issue.

 

[iguanaman]

If your gross income puts you in the top bracket, your deductions and credits can pull your adjusted income, the one you actually pay the tax on, down into a lower bracket.

Say you have $300,000 in income, you pay the lower rate on the 1st $250,000 anyway. You only pay the higher rate on $50,000 of your income. There is no "dropping" into a lower bracket.

 

[Fisher]

Say you have $300,000 in income, you pay the lower rate on the 1st $250,000 anyway. You only pay the higher rate on $50,000 of your income. There is no "dropping" into a lower bracket.

Then how do people with jobs drop into the zero tax bracket if this is an impossibility?

 

[Mithros]

I had to go two places .. this one says what he paid taxes on .
Romney Releases 2011 Tax Returns - NYTimes.com

and this one shows he actual tax return, showing a gross income of 20.9 million
Mitt Romney's 1040 tax return for 2011 - Boston.com

Can you point out where you're getting the 7 million worth of deductions. I found $7,400, and I agree that his investment income was 13.7 million, but that's different than his taxable income.

 

[iguanaman]

Then how do people with jobs drop into the zero tax bracket if this is an impossibility?

Simple, if they make less then the minimum required to pay taxes after deductions they pay zero. You pay the same on that amount. You act like if you make 1 dollar over $250,000 you pay a higher rate on the whole amount. That is simply not true. You pay the higher rate on 1 dollar.

 

[head of joaquin]

Actually most of it wasn't Bush's debt .. no matter how you want to try to sell it .. History of Deficits and Surpluses In The United States

That shows the deficit year by year. But when know you aren't interested in fact .. just spin

Actually it was. The bail out, and two wars. Most of the debt.

But keep spinning.

Meanwhile now IS the time to take on debt, since rates are so low.

 

[Mithros]

This says he hasn't cut the deficit History of Deficits and Surpluses In The United States

Right now we are over loaded with debt ... that has got to stop .. and mind you I'm not placing all the blame on Obama .. . we've had 12 years of out of control reckless spending, and Obama has not curbed that spending one bit.

The 2009 budget is the last budget done under the Bush administration. So Obama came in with a 1.4 trillion dollar deficit, and currently has a 1.0T dollar deficit for a reduction of 400 Billion or about a 30% reduction.

 

[head of joaquin]

Excuse me ? Romney had a gross income of over 20 million dollars in 2011, the income he paid taxes on was 13.7 million, He had far more then charitable deductions (2.25million)

You have misread his return. Most of Romney's deductions were phased out by AMT. The charitable deduction wasn't. Romney's income was mostly low rate cap gains and other prferential treatment.

But you're attempting to deflect. You do understand AMT, don't you, and you do recognize that it phases out or limits most deductions based on brackets? And that makes mincemeat out of Romney "plan" to cut tax rates on the rich and limit already nonexisting deductions.

 

[Fisher]

Simple, if they make less then the minimum required to pay taxes after deductions they pay zero. You pay the same on that amount. You act like if you make 1 dollar over $250,000 you pay a higher rate on the whole amount. That is simply not true. You pay the higher rate on 1 dollar.

I don't act like anything. You assumed that was what I was saying. If your gross before adjustments is above and you adjusted is below then you never pay the higher rate that what someone "makes" would appear to have to pay. So when someone says Romney made X million but only paid 14%, the X million is the irrelevant part. It has to do with what his AGI is and whatever special treatment some of it gets which happens to be the real issue in his case.

 

[head of joaquin]

I don't act like anything. You assumed that was what I was saying. If your gross before adjustments is above and you adjusted is below then you never pay the higher rate that what someone "makes" would appear to have to pay. So when someone says Romney made X million but only paid 14%, the X million is the irrelevant part. It has to do with what his AGI is and whatever special treatment some of it gets which happens to be the real issue in his case.

But you seem to misunderstand our bracket system. Bill Gates pays the same rate as his janitor on the first $15K of income. It's only the dollars in the top bracket that have the highest rate applied.

This of course doesn't take into account AMT, which reduces Gates deductions overall, even on the lowest bracket dollars (and which is why Romeny's "plan" to cut deductions is a fraud)

 

[Fisher]

But you seem to misunderstand our bracket system. Bill Gates pays the same rate as his janitor on the first $15K of income. It's only the dollars in the top bracket that have the highest rate applied.

This of course doesn't take into account AMT, which reduces Gates deductions overall, even on the lowest bracket dollars (and which is why Romeny's "plan" to cut deductions is a fraud)

I am well aware of our system. It is those who think Romney cutting the rates for the top bracket is some big payoff to the rich who don't understand the system.

 

[head of joaquin]

I am well aware of our system. It is those who think Romney cutting the rates for the top bracket is some big payoff to the rich who don't understand the system.

I understand his claim that he'll cut deductions used by the top bracket is total intellectual dreck, because AMT already does that. Do you?