If we wanted a Liberal, we would just vote for Obama. That should be the clear response from Conservatives after Romney followed up his pledge to raise the minimum wage with a tax plan only a Liberal could love.
At first, Romney’s tax plan sounds pretty good. Cut every bracket by 20%, including the top brackets. Who could argue with that? Of course, it doesn’t solve the complexity of taxes or cut into the billions of dollars America spends preparing taxes like Newt’s Flat Tax would, but it does lower taxes across the board, right?
No. Romney went on to say that his tax plan would be revenue neutral, meaning overall it would not be a tax cut. He would pay for the plan by limiting deductions for the top 1%. According to Bankrate.com, that means that Romney would effectively raise taxes on every American who makes more than $343,000. His populism perpetuates his timidity and presents us with a consumerism driven plan that will not grow the economy any more than Obama’s stimulus packages, or Obama’s own tax plans. Romney appears to be appealing to the “99”.
Romney may think he will score points by taking shots at the top 1%, but here is the real problem. Deductions are already limited for the mega-rich like Romney. Romney’s tax plan will create a donut hole tax hike on upper income earners that will become basically irrelevant to someone who makes as much as Romney. His tax plan would result in a 3% tax hike for himself, assuming he targets charitable contributions as one of the deductions he limits.
Based on average itemized deductions for individuals who make more than $250,000, someone just over the top 1% threshhold of $343,000 could end up trading a tax cut of $24,000 from the reduced rates for a tax hike of up to $25,000 from losing their deductions.
In order to make this tax plan more effective in raising taxes on the mega-rich to pay for it instead of small business owners, Romney will have to target deductions that are not already currently limited. For example, you can only claim a deduction for mortgage interest on the first $1.1 million in debt principle. That means that someone with a $5 million dollar home won’t be affected as negatively by Romney’s tax plan as someone with a $1 million home. However, if he decided to limit deductions on charitable giving, that could result in the mega-rich paying for Romney’s tax plan instead of small business owners. Is that something Romney is prepared to do?
Romney’s plan is a timid one because it does not seek to decrease taxes and spending, it simply seeks to move money around from business owners and investors to consumers. That is Liberal Taxation 101. Romney’s plan follows the same Liberal analogy of taking buckets of water from the deep end of the pool and pouring them in the shallow end in order to fill it up. It may win some moderates and independents, but it will not win over conservatives who want to see lower taxes all around and lower government spending to pay for it. We also don’t want to see more money being taken from economic producers and being put towards government waste instead.
Romney’s plan does nothing to simplify taxes, and in fact will make it much worse for upper income earners. He is adding another level of complexity to how deductions are calculated and making it more difficult for economic producers to plan for the future.
Romney has yet to issue substantive details, but for now I give his tax plan an F.
Filed under: Mitt Romney, President Obama | Tagged: 1%, 1.1 million, charitable contributions, debt principle, deductions, donut hole, mitt, Mitt Romney, mitt romney's tax plan, mortgage interest, obama, populism, revenue neutral, Romney, Romney's tax plan, tax, tax brackets, tax cut, taxes, the 99, top 1% |