Wake up, Chicago!

10.10.12

And now, Romney Double-Talk on Taxing the Rich

Suddenly it's Mitt Romney who sounds like the one making class warfare. Brian Beutler reports on the shift in his tax rhetoric that the media haven't really yet asked him about, I reckon because no one who's interviewed him recently knows enough about tax policy. But I do. So here it is.

Romney has taken to saying that he actually does not want to cut rich people's taxes.  Yesterday he said: “I start off with a very fundamental principle, which is we want to reduce the burden on middle-income taxpayers, and we’re not going to provide a tax break to high-income taxpayers.”

But wait. Isn't this the guy who wants to cut the top marginal rate to 28 percent, and cut everyone's marginal rates by one-fifth? Yes, it is. So how can he cut rich peoples' tax rates by one-fifth (from 35 to 28 percent) but ensure that they pay the same?

That's where this deduction cap comes in. Romney favors, he says, putting a cap on the amount of itemized deductions you could take. He has mentioned $17,000, $25,000, and $50,000. Now, TPM has just published this extremely handy chart showing who'd be hit by this cap.

Not surprisingly, it's the people who deduct the most: the upper 20 percent, and especially the top 1 percent. So yes, that's Mittens fouling his own nest, as it were. His rich backers can't be happy about this, right?

Actually, they're probably not upset at all--because the marginal rate cut would save them far, far more money on average than the deduction cap would cost them. Remember, the Tax Policy Center analysis of the Romney plan said that eliminating all loopholes taken advantage of by the rich wouldn't balance out the cuts. So if eliminating them wouldn't provide balance, obviously, merely limiting them would provide balance even less so.

And so, if Romney does all this and keeps the current home mortgage interest deduction for the middle class, as he apparently now promises, his plan will not collect as much revenue as currently--not even close--and it'll bust the deficit.

Romney will be very crafty in debate about how he presents all this, and it's all very confusing to most people. So what do the Democrats need to communicate about all this? Something like: "Governor, you say you want the rich to pay just as much as they do now. And so you have this plan to cut their rates but limit their deductions. That's an awfully complicated way to do it. If you want them to pay the same, why not just keep their rates the same? I think I know why. Because in truth, they won't pay the same under your plan. They'll pay less. A lot less. It's the same old tired trickle-down horse, you've just given it a new pair of shoes."