Why I Love Mitt Romney’s Tax Plan

Let me start by saying this: were I the supreme commander of the United States with absolute control, the Romney tax plan would not be the final product.  I have been and will always be a fan of a pure, simple flat tax where anyone can file with anyone else and the government cannot punish or reward you for how you choose to live your life.

Preface #2: I am a licensed tax professional with experience in preparing thousands of personal, corporate, state and some types of international tax returns, so I do have a little bit of street cred on this issue.

paul ryan

The Romney tax plan is something Paul Ryan can proudly run on

All that being said, I love Mitt Romney’s tax plan.  First, it is not wimpy.  It is not RINO, status quo policy.  The Romney tax plan will be easy to run against for someone like Obama, who is willfully choosing to run as dishonest a campaign as he possibly can.  It has necessary trade offs and it destroys the leverage of special interest groups.  It makes it so that billionaires can no longer zero out their tax returns.  It will be a small tax hike for people like Mitt Romney, who can sit back and collect carrying interest and dividends and live comfortably on that income.  It will be a tax break for the middle class.

The best thing about the Romney tax plan is that it ends the power of special interest groups that is built into the tax code.  Currently, people and corporations are punished and rewarded by the tax system for certain behaviors.  For example: if you go to school, you are rewarded.  If you rent your home, you are punished.  If you put all your money in interest-free muni bonds, you are rewarded.  If you sell your capital assets with less than a year holding period, you are punished.  While there is still uncertainty as to which credits, deductions and loopholes Romney would eliminate, the key is that he will be eliminating many and trading them for a 20% tax cut across the board.

That brings me to the second best thing about his plan: it means a simpler tax return.  Just when you thought it was impossible enough to do your own taxes, with Obama’s plan, now you will have to record your health insurance on your tax return, and if you make a certain amount you will have 3.8% in extra taxes on investment income and .9% extra on wages.  Have fun with those IRS schedules, and don’t screw it up or they’ll catch you two years from now plus interest and penalties.

The Romney plan will eliminate pages of schedules and forms from your tax return and trade them for a simple across the board rate reduction.

If Democrats knew enough about the tax code to understand what this plan does, they would support it too.  Instead of lobbing an extra 4.7% tax increase at taxpayers (including small business owners) who make $200,000, plus an additional 3-4.6% if Obama has his way with the Bush tax cuts, the Romney plan eliminates the tricks that the mega rich use to cut their tax rates below 15%.  It is a targeted change to the tax system, not a hatchet rate increase that harms employers.

If Romney is raising taxes on the super-rich who shelter their income, won’t that hurt growth?  No, and especially not compared to Obama’s plan.  Obama’s plan is to increase the dividend rate to the income tax rate.  That’s a tax hike of up to 19.6 percentage points.  Obama plans to hike capital gains taxes by 5 percentage points.  Romney would leave those taxes as is for the wealthy and eliminate them for people who make less than $200,000.  In other words, if you are middle class you will be able to invest money without paying 15% off the top to the government.  That will change the risk reward ratios for millions of middle class investors and shift capital ownership while encouraging saving among the middle class and not discouraging investment among the rich.

Then there are the tax cuts for businesses to make the US more competitive with other countries.  Also, by switching to a territorial tax system, Romney let’s multinational companies invest in American growth without being penalized and removes the incentive to keep investments off-shore.  This will allow companies to bring overseas profits back to the United States to build headquarters, offices, and manufacturing plants here instead of keeping it in other countries to avoid a US tax hit.  Then the income from this new American growth will contribute to American tax revenues going forward.  With the current system, we tax multinational companies if they want to invest dollars in the US, even if they have already paid foreign taxes on those dollars.

Romney will have some difficulty with certain groups.  For example, if he takes away the $250 deduction for teachers buying teaching supplies in exchange for a 20% tax cut, you can bet there will be ads run with poor children holding out their empty backpacks and a subtext about how they used to have school books but Romney took them away.  If Romney touches the mortgage interest deduction in exchange for a 20% tax break, you can bet the National Association of Realtors will be running ads with homeless people talking about how Romney took their opportunity at home ownership away.  Those special interest groups will hang on tough.  Democrat city mayors who would normally decry the rich for sheltering their income will suddenly discover that tax free interest on municipal bonds is the only thing keeping society from turning into some sort of post-apocalyptic jungle.  Never mind that middle class families will pay less in taxes under the Romney plan; threaten to take away their mortgage interest deduction and most do not know enough to be OK with that.

Then there is the valid argument that the rich already pay their fair share of taxes.  But the Romney tax plan doesn’t target the rich who invest their money in American businesses like Obama’s plan does; it targets the rich who get high life insurance payouts tax-free, who shelter their money in tax-free municipal bond interest, who invest in oil and gas wells to shelter income through high amortization expenses, and so on.  Won’t that hurt investment in oil and gas, you may ask?  Not with Romney as President instead of Obama, because he will open up the avenues for exploration to the point where major companies can hire and get involved.  Then average citizens like you and I will have more opportunity to invest in companies that buy and develop oil fields.  And on top of that, we won’t have to pay taxes on our dividends and capital gains from those investments.

I’ll be honest: I liked the Bush tax cuts, but I didn’t love them.  They made some things more complex and left much of the rest of it at the same complexity.  Meanwhile, they cut taxes across the board.  I applauded their passage and re-passage under Obama, but they didn’t fundamentally change our tax code from the garbled, complicated special interest buffet that it is right now.  I hated Herman Cain’s plan; it would have been a more complicated mess than what we have now, and would have been a huge tax hike on the poor and middle class.  I’ve written extensively about it here at Whitehouse12.com.

I love Mitt Romney’s tax plan, and I never imagined that I would.  Additionally, he hired the right guy, Paul Ryan, to explain it, because it will be much easier to distort his plan for political gain than to spell it out in a way that people can understand.  To be sure, it is an over-all tax cut.  There is no denying that.  However, if it inspires growth as it is designed to, the revenue increase will make up the difference and keep it revenue neutral as promised.  Even the Tax Policy Center, which originally claimed Romney would hike taxes on 95% of Americans, has come clean and admitted his plan is viable.

In my mind, no tax plan will be perfect until it is flat and cuts spending by at least $2 trillion.  But this is the next best thing.

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The Student Vote

There is a truth that Obama will have to face in 2012.  The majority of reasons students voted for Obama in 2008 are irrelevant or evaporated in 2012.  He is not running for the historical title of first black President in 2012.  He did not close Gitmo or bring our troops home, in fact he started a war in Libya.  He did not provide free health insurance for all.  Most of all, he has done nothing to guarantee all these sociology and philosophy graduates jobs when they graduate.

John McCain was not inspiring for student voters.  He was old, determined to win the wars America got into, white, male, loved America, and he was a Republican.  Students have it drilled into their heads that this represents the great satan.

Romney may not be the next great satan to the educational institution, but he certainly isn’t the hip symbol of progressive diversity that Obama was.  However, Romney doesn’t need to win the student vote.  He just needs Obama to lose it.

Obama is still popular with teachers, who by and large are enslaved to their unions and engrained socialism.  But students now have a record to go on, and the novelty has worn off.  The funny thing about students is that they tend to be idealistic purists as often as they are naively ignorant.  The same student who would trade an A for a six pack might also skip the Avengers movie because certain details don’t conform to the comic books.  Obama is certainly not everything American students hoped and dreamed about.  In fact, students who are honest with themselves would realize Obama is nothing that they hoped and dreamed for.

Obama has a special sort of hypocrisy that attentive students will sniff out.  Obama might flash his environmental credentials to a crowd of students, but then in front of business owners he touts how oil extraction has increased under his Presidency even if he had nothing to do with it.  He might tell students how he is bringing our troops home, but then he celebrates excursions into Pakistan to kill terrorists and Libya to do nation building.  He may make overtones to the gay community and talk about equal rights, but look how fast his administration is throwing Biden under the bus for endorsing gay marriage.  Perhaps in 2008, young students might be fooled.  But now Obama has a record.

Obama can’t even win on student loan rates since he demonstrated those take second place to his healthcare legacy.  Republicans wrote a bill to keep student loan interest rates low, but Obama has opposed the bill since it is paid for by tapping a special fund created by his healthcare law.  Obama would rather pay for it by borrowing more from China, which will cause interest rates to balloon even more in the long term.

The difference between a student voter and nearly any other of Obama’s target groups is that as purists students will not vote for the lesser of two evils.  Students won’t vote for Obama just to keep Romney out of office.  They have been taught two things very well: follow your heart, and your vote doesn’t count.  This frees them to vote for Rosie O’Donnell, write in their dorm-mate’s name, or skip the voting booth altogether to stay home and put those free morning after pills to good use.

Can Obama afford to lose the student vote?  Not if you believe the statisticians who put the student vote at 1/5th of the population.  A significant decline in this voting block for Obama means Florida, Ohio, North Carolina, Virginia,  and Colorado, even if they simply stay home.

Cain’s Florida Shocker

The value of the Florida straw poll was increased dramatically when Governor Rick Scott suggested that the winner of the Florida straw poll would also be the winner of the Presidency.  Scott’s prediction is not outlandish.  The Orlando event and debate was huge, in an area that represents the swing difference between the conservative north Florida and more liberal areas of the south.  The poll represents the party interests as many GOP and TEA party groups throughout the state made appearances.  And it would be almost impossible to imagine a 2012 candidate in the general election winning the Presidency without carrying Florida.

But who thought Herman Cain would win the Florida straw poll?

Rick Perry was the favorite going into the straw poll.  Perry also stayed behind and continued to work the crowd after the other candidates left.  Perry bought breakfasts and schmoozed.  He understood how crucial this poll was.  But in the end, Cain did twice as well as Perry in the straw poll.  While Romney continues to poll well in many northern states, Cain’s victory will at the very least cause undecided voters to take a second look.

While this may not change the scene too much for Herman Cain, it certainly is a tough blow to Rick Perry.  Perry struggled in the debate, blaming his performance on lack of sleep.  Perry also made a huge blunder by suggesting what amounted to a claim that if you don’t support instate tuition discounts for illegal aliens you don’t have a heart.  Even pro-amnesty Republicans will have a hard time swallowing that one.  So far the debate performances have not had much effect on the perceived standings of the candidates.  This time, Perry is feeling the painful fallout.

Interestingly, Ron Paul did not do well.  Typically his straw poll numbers are inflated, but not in Florida.  Bachmann did terrible and Huntsman barely registered.

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