Paper finds Romney tax plan would raise taxes on middle class, lower on rich

I will preface this by saying that 1) I have not read through the entire paper yet; and, 2) it has not been published in a peer-reviewed journal, so you should definitely look into it's methodology and findings yourself, however it's interesting.

Also forgive me if the topic title is a little misleading, the paper finds these results for the parts of the plan that it could assess. Parts of the plan it did not assess as the authors did not have sufficient details about them.

(the first few paragraphs):

This paper examines the tradeoffs among three competing goals that are inherent in a revenue-neutral income tax reformmaintaining tax revenues, ensuring a progressive tax system, and lowering marginal tax rates. As a motivating example, we estimate the degree to which individual income tax expenditures would have to be limited to achieve revenue neutrality under the individual income tax rates and other features advanced in presidential candidate Mitt Romneys tax plan, and how the required reductions in tax breaks could change the distribution of the tax burden across households. (We do not score Governor Romneys plan directly, as certain components of his plan are not specified in sufficient detail, nor do we make assumptions regarding what those components might be.)

Our major conclusion is that a revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed including reducing marginal tax rates substantially, eliminating the individual alternative minimum tax (AMT) and maintaining all tax breaks for saving and investment would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers. This is true even when we bias our assumptions about which and whose tax expenditures are reduced to make the resulting tax system as progressive as possible. For instance, even when we assume that tax breaks like the charitable deduction, mortgage interest deduction, and the exclusion for health insurance are completely eliminated for higher-income households first, and only then reduced as necessary for other households to achieve overall revenue-neutrality the net effect of the plan would be a tax cut for high-income households coupled with a tax increase for middle-income households.

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.

It would be possible to reduce the regressivity of such plans or even to maintain progressivity in such plans with reductions in the tax rate cuts for high-income taxpayers and/or significant reductions in the tax preferences for saving and investment, including the preferential rates on capital gains and dividends.

http://www.brookings.edu/research/papers/2012/08/01-tax-reform-brown-gale-looney

Thoughts? What I find particularly interesting is that even after controlling for generous growth effects, the main results still hold.

I say we raise taxes on people living in Chicago. But in a more serious manner, it's hard to raise taxes on the wealthy because they make a lot of money off investments as opposed to salary.

I say we raise taxes on people living in Chicago. But in a more serious manner, it's hard to raise taxes on the wealthy because they make a lot of money off investments as opposed to salary.

sonicare

I pity anyone who votes for RomneySteverXIII

I pity anyone who votes for RomneySteverXIII

I doubt he's going to win tho. He's a really bad candidate.

I pity anyone who votes for RomneySteverXIII

[QUOTE="SteverXIII"]I pity anyone who votes for Romneyl4dak47

I doubt he's going to win tho. He's a really bad candidate. GreySeal9

[QUOTE="GreySeal9"]I doubt he's going to win tho. He's a really bad candidate. SteverXIII

They might just vote libertarian.

Assuming this is true, it confirms my suspicions that he only cares about the rich. l4dak47

Well he IS part of the Republican oarty after all...

[QUOTE="SteverXIII"]I pity anyone who votes for RomneyGreySeal9

I doubt he's going to win tho. He's a really bad candidate.

[QUOTE="GreySeal9"]I doubt he's going to win tho. He's a really bad candidate. SteverXIII

I think it will stop enough of them to give Obama a second term. Bush was a pretty sh!tty President but he wasn't a bad candidate. I mean, yeah, he sucked at debates, but he ran a solid campaign and knew how to appeal to people.

Romney, on the other hand, is running an extremely incompetent campaign, and he just seems to have no idea how to make himself look more appealing. His very personality seems to rub people the wrong way, which is not good for somebody running for President. On top of that, he is like a poster child for out of touch rich people. The fact that he won't release his tax returns speaks volumes about how inappropriate of a candidate he is in this political climate. Plus he does not appear confident and gets rattled, which will look extremely bad constrasted with Obama's coolheaded confidence. Romney's disaster of a foreign trip is a perfect example of how bad of a candidate he is. Romney is probably the reason Obama is leading the polls despite widespread pessimism and anxiety about the economy.

[QUOTE="GreySeal9"]

[QUOTE="SteverXIII"]I pity anyone who votes for RomneyAllicrombie

I doubt he's going to win tho. He's a really bad candidate.

The Republican field was indeed embarrasing. I blame McCain. By picking Palin, he pretty much opened the door to joke candidates.

I can't wait to see Mitt in debates with Obama, especially in the town hall style. I don't think he'll stand a chance.jimkabrhel

I can't wait to see Mitt in debates with Obama, especially in the town hall style. I don't think he'll stand a chance.jimkabrhel

I think Romney would stand toe to toe with Obama if they were just debating pure policy, but since Presidential debates are a performance of sorts, I think Obama will mop the floor with him. Romney is a poor political performer and I think all his flip flops and contradictions will haunt him in the debates.

I wonder how long it's going to take for some economically illiterate moron to come in and say that rich people shouldn't be given a heavier tax burden than middle class because that counts as "punishing" them.

[QUOTE="jimkabrhel"]I can't wait to see Mitt in debates with Obama, especially in the town hall style. I don't think he'll stand a chance.SteverXIII

I hope Obama hits him hard on the tax returns issue during the debates.

Republican. Not surprised.

Assuming this is true, it confirms my suspicions that he only cares about the rich. l4dak47

These idiot politicans are killing growth with these taxes.

How about we cut government spending and lower taxes on everyone. seems like a win win to me.mingmao3046

[QUOTE="mingmao3046"]How about we cut government spending and lower taxes on everyone. seems like a win win to me.jimkabrhel

I will preface this by saying that 1) I have not read through the entire paper yet; and, 2) it has not been published in a peer-reviewed journal, so you should definitely look into it's methodology and findings yourself, however it's interesting.

Also forgive me if the topic title is a little misleading, the paper finds these results for the parts of the plan that it could assess. Parts of the plan it did not assess as the authors did not have sufficient details about them.

(the first few paragraphs):

This paper examines the tradeoffs among three competing goals that are inherent in a revenue-neutral income tax reformmaintaining tax revenues, ensuring a progressive tax system, and lowering marginal tax rates. As a motivating example, we estimate the degree to which individual income tax expenditures would have to be limited to achieve revenue neutrality under the individual income tax rates and other features advanced in presidential candidate Mitt Romneys tax plan, and how the required reductions in tax breaks could change the distribution of the tax burden across households. (We do not score Governor Romneys plan directly, as certain components of his plan are not specified in sufficient detail, nor do we make assumptions regarding what those components might be.)

Our major conclusion is that a revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed including reducing marginal tax rates substantially, eliminating the individual alternative minimum tax (AMT) and maintaining all tax breaks for saving and investment would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers. This is true even when we bias our assumptions about which and whose tax expenditures are reduced to make the resulting tax system as progressive as possible. For instance, even when we assume that tax breaks like the charitable deduction, mortgage interest deduction, and the exclusion for health insurance are completely eliminated for higher-income households first, and only then reduced as necessary for other households to achieve overall revenue-neutrality the net effect of the plan would be a tax cut for high-income households coupled with a tax increase for middle-income households.

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.

It would be possible to reduce the regressivity of such plans or even to maintain progressivity in such plans with reductions in the tax rate cuts for high-income taxpayers and/or significant reductions in the tax preferences for saving and investment, including the preferential rates on capital gains and dividends.

http://www.brookings.edu/research/papers/2012/08/01-tax-reform-brown-gale-looney

Thoughts? What I find particularly interesting is that even after controlling for generous growth effects, the main results still hold.

chessmaster1989

I would also add, that considering this comes from the Brookings Institute I take it with a grain of salt. They are a left leaning think tank. The counter to the Heritage Foundation so to speak. maheo30

[QUOTE="jimkabrhel"][QUOTE="mingmao3046"]How about we cut government spending and lower taxes on everyone. seems like a win win to me.maheo30

I wonder how long it's going to take for some economically illiterate moron to come in and say that rich people shouldn't be given a heavier tax burden than middle class because that counts as "punishing" them.

Barbariser

[QUOTE="Barbariser"]

I wonder how long it's going to take for some economically illiterate moron to come in and say that rich people shouldn't be given a heavier tax burden than middle class because that counts as "punishing" them.

Lonelynight

Oh snap.

[QUOTE="Barbariser"]

I wonder how long it's going to take for some economically illiterate moron to come in and say that rich people shouldn't be given a heavier tax burden than middle class because that counts as "punishing" them.

Lonelynight

[QUOTE="chessmaster1989"]

I will preface this by saying that 1) I have not read through the entire paper yet; and, 2) it has not been published in a peer-reviewed journal, so you should definitely look into it's methodology and findings yourself, however it's interesting.

Also forgive me if the topic title is a little misleading, the paper finds these results for the parts of the plan that it could assess. Parts of the plan it did not assess as the authors did not have sufficient details about them.

(the first few paragraphs):

This paper examines the tradeoffs among three competing goals that are inherent in a revenue-neutral income tax reformmaintaining tax revenues, ensuring a progressive tax system, and lowering marginal tax rates. As a motivating example, we estimate the degree to which individual income tax expenditures would have to be limited to achieve revenue neutrality under the individual income tax rates and other features advanced in presidential candidate Mitt Romneys tax plan, and how the required reductions in tax breaks could change the distribution of the tax burden across households. (We do not score Governor Romneys plan directly, as certain components of his plan are not specified in sufficient detail, nor do we make assumptions regarding what those components might be.)

Our major conclusion is that a revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed including reducing marginal tax rates substantially, eliminating the individual alternative minimum tax (AMT) and maintaining all tax breaks for saving and investment would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers. This is true even when we bias our assumptions about which and whose tax expenditures are reduced to make the resulting tax system as progressive as possible. For instance, even when we assume that tax breaks like the charitable deduction, mortgage interest deduction, and the exclusion for health insurance are completely eliminated for higher-income households first, and only then reduced as necessary for other households to achieve overall revenue-neutrality the net effect of the plan would be a tax cut for high-income households coupled with a tax increase for middle-income households.

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.

It would be possible to reduce the regressivity of such plans or even to maintain progressivity in such plans with reductions in the tax rate cuts for high-income taxpayers and/or significant reductions in the tax preferences for saving and investment, including the preferential rates on capital gains and dividends.

http://www.brookings.edu/research/papers/2012/08/01-tax-reform-brown-gale-looney

Thoughts? What I find particularly interesting is that even after controlling for generous growth effects, the main results still hold.

radicalcentrist

I agree with you on investment incentives (first part) but not necssarily with saving incentives (second part). All else equal, a change in the savings rate may positively affect real growth, however the method you describe for incentivizing savings (I'm assuming you're proposing a consumption tax rather than an income tax) also creates a distortionary effect in labor incentives, which will tend to reduce growth from changes in savings. Whether these effects will offset each other or one will dominate is not something I can claim to know.

P.S. I'm going off memory of Solow growth since it's been about 2 years since I last used it.

[QUOTE="SteverXIII"][QUOTE="GreySeal9"]I doubt he's going to win tho. He's a really bad candidate. GreySeal9

I think it will stop enough of them to give Obama a second term. Bush was a pretty sh!tty President but he wasn't a bad candidate. I mean, yeah, he sucked at debates, but he ran a solid campaign and knew how to appeal to people.

Honestly I think that whole sucking at debates (and pretty much ever other kind of public appearance) was deliberate. If you look at old footage, old video, etc of Bush he is not a stupid man. In fact I watched an interview with him from ether the late 80s or early 90s and was amazed at how intelligent he seemed compaired to the stammering buffoon we had in the White House for 8 years. I believe he deliberately dumbed himself down because dumb but folksy appeals to people.

[QUOTE="GreySeal9"]

[QUOTE="SteverXIII"] Thats not going to stop Murica's finest from voting for him no?worlock77

I think it will stop enough of them to give Obama a second term. Bush was a pretty sh!tty President but he wasn't a bad candidate. I mean, yeah, he sucked at debates, but he ran a solid campaign and knew how to appeal to people.

Honestly I think that whole sucking at debates (and pretty much ever other kind of public appearance) was deliberate. If you look at old footage, old video, etc of Bush he is not a stupid man. In fact I watched an interview with him from ether the late 80s or early 90s and was amazed at how intelligent he seemed compaired to the stammering buffoon we had in the White House for 8 years. I believe he deliberately dumbed himself down because dumb but folksy appeals to people.

I wouldn't be surprised if that was true. I mean, I definitely think the whole "cowboy" image was contrived, so it's not too much of a stretch to think that his lack of intellect was contrived as well, especially since I never thought he was Palin stupid even if he did seem like one of our dumber Presidents.

[QUOTE="GreySeal9"]

[QUOTE="SteverXIII"] Thats not going to stop Murica's finest from voting for him no?worlock77

I think it will stop enough of them to give Obama a second term. Bush was a pretty sh!tty President but he wasn't a bad candidate. I mean, yeah, he sucked at debates, but he ran a solid campaign and knew how to appeal to people.

Honestly I think that whole sucking at debates (and pretty much ever other kind of public appearance) was deliberate. If you look at old footage, old video, etc of Bush he is not a stupid man. In fact I watched an interview with him from ether the late 80s or early 90s and was amazed at how intelligent he seemed compaired to the stammering buffoon we had in the White House for 8 years. I believe he deliberately dumbed himself down because dumb but folksy appeals to people.

[QUOTE="Barbariser"]

I wonder how long it's going to take for some economically illiterate moron to come in and say that rich people shouldn't be given a heavier tax burden than middle class because that counts as "punishing" them.

Lonelynight

:lol:

This shouldn't surprise anyone.

Really, it's a sad day in America when you have to choose between a corporate robot who tries to hide it and a corporate robot who is upfront about it. I'm not sure which one is better.

Oh, wow. This is extremely surprising. Who would have thought that a millionaire like Romney would propose such a plan. I'm blown away by this. I'm...really...blown...away.

Has Romney released a plan yet for this paper to base this off of?

[QUOTE="Lonelynight"][QUOTE="Barbariser"]

I wonder how long it's going to take for some economically illiterate moron to come in and say that rich people shouldn't be given a heavier tax burden than middle class because that counts as "punishing" them.

Barbariser

:lol:

Obviously wrong. Any correct analysis of Romney's talking points would reveal that he plans to raise taxes on all Americans while also lowering taxes for all Americans.

I want more roads, more social programs, greater guarantees in health coverage, better pay and benefits for veterans, more fire and police protection, more energy, less pollution... but I don't want to pay a cent for any of it. I want someone else to pay for it all. I deserve it.

Mitt Romney doesn't care about the middle and lower class. In other news, Barrack Obama doesn't care about the middle and lower class. In other news, 99.9% of politicians that get voted into office don't care about the middle and lower class. In other news, the middle and lower class are idiots for voting these middle and lower class haters into office continuously for generations thinking they are going to do something good for the country.

[QUOTE="worlock77"]

[QUOTE="GreySeal9"]

I think it will stop enough of them to give Obama a second term. Bush was a pretty sh!tty President but he wasn't a bad candidate. I mean, yeah, he sucked at debates, but he ran a solid campaign and knew how to appeal to people.xscrapzx

Honestly I think that whole sucking at debates (and pretty much ever other kind of public appearance) was deliberate. If you look at old footage, old video, etc of Bush he is not a stupid man. In fact I watched an interview with him from ether the late 80s or early 90s and was amazed at how intelligent he seemed compaired to the stammering buffoon we had in the White House for 8 years. I believe he deliberately dumbed himself down because dumb but folksy appeals to people.

Did you not watch any video of him during his time in office? It seemed like the man couldn't get through two sentences without stumbling over his words. That's what I meant by "stammering buffoon".