It's been difficult for the experts to study Mitt Romney's tax plan because it's only half a plan. He says he'll lower rates for everybody and make up the difference by eliminating deductions and loopholes. But he won't say which deductions and loopholes. He tries to reassure by stating that he'll focus on the ones used by wealthy people.
But it's sheer fantasy, as three experts at Brookings' Tax Policy Center have now demonstrated with an important new study. There just isn't enough money in the elimination of deductions and loopholes for the wealthy to make it all add up. Plus, Romney’s plan would decrease federal tax revenues by $360 billion in 2015. Bottom line:
Americans making over $1 million would see an increase in after-tax income of 4.1 percent (an $87,000 tax cut), those making between $500,000 and $1 million would see an increase of 3.2 percent (a $17,000 tax cut), and those making between $200,000 and $500,000 would see an increase of 0.8 percent (a $1,800 tax cut).
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Because taxpayers above $200,000 as a group have received a net tax cut, revenue neutrality requires that taxpayers below $200,000—about 95 percent of the population—experience a tax increase. If this increased burden is shared equally among all households earning less than $200,000, after-tax income among individuals in this group would decrease by (on average) 1.2 percent (an average tax increase of $500 per household).
No wonder he only talks about the good half. Then there's the whole question of how he's going to raise Pentagon spending by a significant amount without helping to explode the deficit as Reagan did.
There is no real policy here. There is only saying stuff the right wants to hear out of fear that they'll attack him. It all really does come back to the same thing with this guy.
