Here's Why Romney's Tax Logic Doesn't Stand Up Under Pressure Mitt Romney Won't Lower Americans' Taxes
The traditional Republican argument for tax cuts is that people will work more, and hence boost the economy, if marginal rates are lower -- that is, if people get to keep a larger share of each extra dollar they earn. No serious economist actually believes cuts in current rates could increase revenue, but most agree that a reduction in the marginal tax burden increases the incentive to work.
The Republican enthusiasm for tax cuts, though, doesn’t apply to Romney’s reform. That’s because his plan tinkers with statutory tax rates (the rates written in the law), while the loss of deductions will probably leave unchanged marginal effective rates (the share of each extra dollar in income we actually pay). This point has been made forcefully by Alex Brill and Alan Viard, both economists at the right-leaning American Enterprise Institute
, who wrote that “lowering statutory tax rates while broadening the income tax base generally does not reduce work disincentives because it leaves the relevant effective tax rates unchanged.”
Perverse Incentives
Reforming our tax system remains an important priority. Broadening the tax base is central to many proposals, including those of the Simpson-Bowles deficit reduction commission, the Domenici-Rivlin debt reduction task force and President Barack Obama. The logic of these reforms is that, whether or not we want to raise more revenue, we should eliminate the perverse incentives our tax code creates -- for example, by rewarding people for taking on debt to buy a house. Eliminating deductions would eliminate the distortions.
Romney’s rationale for tax reform seems to be based on a more cynical political logic. He is campaigning on the parts of his plan that would lower voters’ tax burden, while hoping they’ll forget about the equal-and-opposite-reaction parts that will raise it. In reality, he’s not planning to cut taxes at all.
Boy, you can hear the surprise in *MY* voice!! But y'all keep sucking down that :Koolaid: . If the GOTP says it, it must be so, and since we already know y'all don't care about anybody's character, as long as they have an "R" by their name, this should be an easy one for ya...
OF COURSE, he's going to "lower taxes" on YOU--just not "everybody else"... rofllol
Yeah, I guess those right-leaning guys at the American Enterprise Institute got it all wrong. I'm really not interested in "schools of economists" from Liberty University or the other right-wing institutions. They're likely the same guys that believe the earth was created in 6000 years....
That doesn't change the point of the OP, that RMoney's plan WON'T LOWER AMERICAN'S TAXES, now does it....
"will probably leave".
You state it as a fact and your experts admit it is just speculation. You can run the formulas but since many of his ideas would are dramatic changes that haven't been tried before, no one really knows.
It isn't like we have a control group to test Obama's 2013 DOA plan and Romney's ideas before they reach Congress where they are guaranteed to change.
Obama had his own tax plan in 2008, and even with a Dem Congress, he didn't get what he wanted.
So in essence, your thread is at best speculation about a pie in the sky plan that has no chance of passing without severe modification.
Think the home realtor lobby is really going to give up the mortgage exemption without the biggest lobbying effort they can muster?
Thomas Sowell: There are no solutions, just trade-offs.
My thread is not "speculation"...My thread is about the opinions and research of some pretty sharp economists...from The American Enterprise Institute...That "right-leaning organization"....
And you do the same LJ. has it occurred to you that you might be losing votes for your guy as opposed to teaching anyone here what the real differences are between the candidates.
Just keep slinging the sheeeeeet to see what you can stick. Nothing sticks coming from you.
I'm not losing votes for my guy... The folks who are going to vote against Obama, will do so regardless of what I say...And those that are going to vote against Money-Boo-Boo are going to do so regardless of what YOU say...
We have- a system that is so screwed up beyond any recognition that there's no easy fix for anything right now.
Romney - however, is planning on removing "deductions" and replacing them with a lower tax rate. This is a good step in my mind- clearing up the mess we have now. I'd gladly give up my mortgage deduction for a lower tax rate.
I've always said that the government creates these "deductions" and credits so it can pick the winners and losers at it's whim. It complicates everything. Deductions are just a scam that politicians use to give one group of taxpayers favor over others. We give those who owe a mortgage a break, which means that those who rent pay more taxes.
It also gives the liberals an excuse to claim that people like me are dependant on government- when it's not the case. Of course I'm going to take the mortgage deduction, because that's how the rules are set up - it's a total mess.
Lets get rid of all deductions and set the proper tax rate for everyone. This is what Romney is proposing, and I agree that it levels the playing field.
I also know that soaking the rich for more taxes won't help at all- it will not create any new jobs. It will only make the productive- less productive. The only short term winner is government. In the long term, we all lose big time.
We need more taxpayers- which means that the 47% who pay nothing right now need to start paying. The way out of this debt is to make more people rich- not make more rich people poor.
Irony? If Mitt loses and Congress remains Republican, Mitt could wind up paying his current low tax rates. Or taxmageddon could become law and get everybody in a fell swoop including lower income people.
Thomas Sowell: There are no solutions, just trade-offs.
