In my continued quest for some semblence of journalistic credibility, I had a column published in the Aspen Daily News today that seeks to bridge the disconnect between President Obama’s and Vice President Biden’s insistence that Mitt Romney’s tax plan represents a $5 trillion tax cut, with Romney’s and Paul Ryan’s insistence that no such cut exists. I hope you find it informative.
Posts Tagged ‘romney’
Now that was a debate; contentious, revealing, and filled with acrimonious exchanges between two candidates who could barely conceal their distaste for one another. If this were wrestling, Joe Biden would have concluded the night by beating Paul Ryan senseless with a coconut, a la Rowdy Roddy Piper. Tonight was, in short, everything the Obama-Romney debate wasn’t.
Before we get to the tax issues, a couple of quick thoughts:
- What a difference it makes to have a moderator that controls the flow of the discourse and asks the questions the public wants to hear. Great job by Martha Raddatz.
- While Obama’s campaign advisors may well have urged him to remain “Presidential,” they were apparently more than happy to take the reins off Joe Biden. Biden attacked everything we expected Obama to address: Romney’s infamous “47 percent” comment, his 13% effective tax rate, and his continued protection of the preferential tax rates afforded “carried interests” — often in an aggressive, accusing manner. (For more on carried interests, click here).
- While Biden’s candor was refreshing, his decorum was decidedly less so. Kudos to Paul Ryan for not getting angrier than he did with Biden’s constant laughing and gesticulating while Ryan was speaking. Ryan did strike a blow with that “I think the vice president very well knows that sometimes the words don’t come out of your mouth the right way” shot, but for whatever reason, it came off more as over-rehearsed and ill-timed than a memorable one-liner.
- Regardless of your political leanings, it’s hard to argue that Biden didn’t have the response of the night when he replied to Ryan’s criticism of the President’s stimulus spending by pointing out that Ryan had written him letters on two occasions imploring Biden to send stimulus money to Ryan’s home state of Wisconsin. To be fair, Ryan had to know Biden’s response was coming, but he was obligated to address the Obama administration’s rampant spending.
Now, on to the tax issues addressed throughout the debate; specifically, what did voters learn about the future of tax policy?
Joe Biden and the $500 Billion Tax Cut for the Wealthy
Tax policy made its first appearance earlier than anticipated, during a discussion on unemployment. Shortly after an impassioned rant about what he perceived to be Romney and Ryan’s apathy towards 47% of Americans, Biden added:
“They’re pushing the continuation of a tax cut that will give an additional $500 billion in tax cuts to 120,000 families. And they’re holding hostage the middle class tax cut because they say we won’t pass — we won’t continue the middle class tax cut unless you give the tax cut for the super wealthy.”
Unfortunately, debates don’t come complete with citations, so the viewing public was likely left struggling to make sense of the genesis of Biden’s statistics. Lucky for you, I’ve got a winning combination of an abundance of free time and a very understanding wife, so I’ve gone ahead and done the legwork for you.
As I discussed in detail here, the Bush tax cuts are set to expire on December 31, 2012. Should that occur, the top individual tax rate will rise from 35% to 39.6%, the next highest rate will jump from 33% to 36%, and each lower bracket will experience an increase as well.
Currently, the primary point of contention between Republicans and Democrats is what to do with those top two tax rates. The President wants to allow those two highest rates to reset to 36% and 39.6%, respectively, while preserving the reduced tax rates from the Bush-era for all of the lower tax brackets. Effectively, this would raise taxes in 2013 on only those taxpayers earning in excess of $200,000 ($250,000 if married filing jointly).
Republicans, on the other hand, have refused to allow an extension of the lower tax rates unless the two highest tax brackets are extended along with them.
So where does the $500 billion come in?
According to the President’s budget for the period 2013-2022, continuing the Bush tax cuts for those earning in excess of the $200,000 threshold — approximately 2% of the population — would cost the government $968 billion in revenue. Click the image below to enlarge the chart taken from the Budget proposal.
A separate study published by the Tax Policy Center indicated that 55% of the total benefit enjoyed by those top 2% of taxpayers that would be impacted by the expiration of the 33% and 35% brackets would inure to the top 0.1% of the population. The TPC then added that the top 0.1% of the population consists of approximately 120,000 taxpayers.
From there, Biden just does some basic math. $968 billion total benefit for the top 2% x 55% enjoyed by the top 0.1% = $532 billion benefit for the top 0.1%, or 120,000 families — if the Bush tax cuts are extended for all taxpayers.
This would be a statistic repeated several times throughout the night, and it served as the foundation for the ensuing argument, in which Biden accused Ryan and Romney of holding the middle class hostage by refusing to extend the Bush tax cuts for the lower brackets, while Ryan responded by claiming that the additional $968 billion in revenue generated by allowing the cuts to expire for the top 2% wouldn’t put a dent in the deficit.
So who’s right?
Quite frankly, they both are.
There really is no compelling need to extend the Bush cuts for the top 2%, unless you are a firm believer that a lower rate will stimulate economic growth, and many are. The idea fronted by blowhards like Bill O’Reilly that if you tax “the achievers,” they’ll simply stop achieving, is spurious and laughable. Rates have been as high as 70% under the Eisenhower administration, and best I can tell, no leading minds of that era put down their pencils and said “To hell with this… I was going to invent the Atari 2600, but a 70% tax rate? Forget it. I’ll just go back to bed.”
But Ryan is also dead on in his analysis: $968 billion — assuming that number is accurate — would not make a dent in our ever-growing deficit. If the Obama administration is serious about reducing the deficit, there would have to be significant spending cuts to make up for the fact that the top 2% simply isn’t big enough to foot the additional tax bill necessary to eat away at our mounting debt.
Of course, arguing that since the $968 billion of additional revenue wouldn’t make a dent, we needn’t bother to collect it isn’t the soundest fiscal argument either, but I get Ryan’s point. A recent study by the Tax Foundation suggested that simply by cutting the top tax rate to 28%, you could grow the GDP by 7.4% over a 5-10 year window, so perhaps Romney’s plan to cut rates and recover revenue through economic growth has merit. The problems that come with this proposal, as we’ll discuss shortly, lay in its implementation.
But here’s the real oddity of this portion of the debate: Romney’s tax plan does not involve extending the Bush tax cuts for the rich. It involves extending the tax cuts for all taxpayers, then reducing the Bush-era tax rates by an additional 20% across the board. As President Obama referenced several times during the presidential debate, this is expected to cost the government $5 trillion in tax revenue over the next decade, with nearly $2.4 trillion of that benefit going to the wealthiest 2% of taxpayers according to the now-famous Tax Policy Center study. This is a much more meaningful reduction in revenue — and potential corresponding increase to the deficit — then the $500 billion number Biden focused on.
Of course, as we discussed with regards to the previous debate and will do so again below, the Romney campaign promises to pay for any and all lost tax revenue with offsetting reductions or caps to deductions, making the $5 trillion tax cut — in their eyes — no tax cut at all. And while the two candidates did eventually get to discussing this rather important detail, it was through no impetus of their own, but rather the urging of Raddatz. Instead, the voting public had to watch the two candidates debate the merits of a tax plan that is not currently on the table, which likely only served to confuse.
How Do You Define Small Business?
Later in the night, when the discussion formally turned to tax policy, Ryan was asked by Raddatz what portion of the population would pay more, and what portion would pay less, in tax if Romney were elected. Ryan responded:
“Our entire premise of these tax reform plans is to grow the economy and create jobs. It’s a plan that’s estimated to create 7 million jobs. Now, we think that government taking 28 percent of a family and business’s income is enough. President Obama thinks that the government ought to be able to take as much as 44.8 percent of a small business’s income.”
Now, if I were sitting at home (I was) and owned a small business (I don’t), I would take this to mean that my tax rate was about to approach 50%. But there’s an issue of semantics that needs to be addressed:
When Romney and Ryan refer to “small businesses,” they are actually referring to the 36 million taxpayers who report their business income directly on their individual income tax return, and are therefore subject to the individual tax rates at the center of this debate. These business types include sole proprietorships, single-member LLCs, Subchapter S corporations, and partnerships.
What these business types have in common is that they do not pay tax to the government on their own behalf — unlike a Subchapter C corporation, which computes and pays its own tax at the corporate income tax rate — rather, the income of the business “flows through” and is taxed at the individual owner level.
But here’s the issue: of the 36 million taxpayers who own sole proprietorships, single-member LLCs, or an interest in a flow through entity, only 900,000 — or 2.5% — actually pay tax at the two highest tax rates. Stated in another manner, by allowing the Bush tax cuts to expire for those individuals earning more than $200,000, only 2.5% of all “small businesses” would actually pay higher taxes in 2013 than they do today. The other 97.5% of small business owners will pay the same 28% or lower tax rate that they pay today, assuming, of course, the Bush tax cuts are extended for all taxpayers earning less than $250,000.
Don’t believe me? Click to enlarge the chart:
And this is precisely the point Biden should have addressed. With Ryan accusing the President of raising taxes on small business owners, Biden should have been poised to react. And while he did point out that the expiration of the Bush tax cuts for the top 2% would impact only 2.5% of small businesses, he should have added that if the Republicans continue to refuse to extend the Bush tax cuts for the lower brackets, then all small business owners will pay more tax in 2013, as the current rates of 10/15/25/28/33/35% will reset to 15/28/31/36/39.6%.
The Competing Goals of Focused Deduction Elimination and Tax Reform
Soon after the small business conversation, Moderator Raddatz delivered where Jim Lehrer failed miserably in the presidential debate by asking Ryan exactly how Mitt Romney plans to pay for his proposed 20% across-the-board tax cuts. [As a reminder, the reduction in tax rates is expected to cost the government approximately $5 trillion over the next decade, but Romney has promised to offset the lost revenue with additional revenue raisers] Unfortunately, Ryan’s response was nothing more than a vague string of misdirections, devoid of the details tax policy experts — and informed voters — have long coveted:
” Look — look at what Mitt Romney — look at what Ronald Reagan and Tip O’Neill did. They worked together out of a framework to lower tax rates and broaden the base, and they worked together to fix that. What we’re saying is, here’s our framework. Lower tax rates 20 percent. We raised about $1.2 trillion through income taxes. We forego about $1.1 trillion in loopholes and deductions. And so what we’re saying is, deny those loopholes and deductions to higher-income taxpayers so that more of their income is taxed, which has a broader base of taxation..so we can lower tax rates across the board. Now, here’s why I’m saying this. What we’re saying is, here’s the framework…Mitt — what we’re saying is, lower tax rates 20 percent, start with the wealthy, work with Congress to do it…
Now, before I continue, let me remind you that I’m not an Obama guy, I’m not a Romney guy, I’m a tax guy. (in fact, I plan on voting for Kodos) And here’s why you should care about this portion of the debate if you’re a voter.
The vagueness of Romney’s plan is more than frustrating; it is also misleading. For example, a middle-class taxpayer may vote for Romney believing he is voting for a reduction in his top rate from 28% to 22.4% that will leave him with additional after-tax income. However, depending on which deductions are eliminated or capped in order to make the plan revenue neutral, the taxpayer may actually see his federal tax obligation increase, despite the reduced rates.
Because Romney and Ryan have no plan for how they will generate the additional tax revenue necessary to offset the revenue lost to the rate cuts, they can’t possibly promise anyone what the effect of their tax plan will be. They cannot guarantee that those earning in excess of $250,000 won’t see their overall tax share go down, though that hasn’t stopped them from trying. They can’t guarantee that the middle class won’t see their tax obligation increase, though that hasn’t stopped them from trying. They can’t promise any of these things, because they have no idea how the plan will work.
Just one week ago, Romney used the Presidential debate to introduce the idea of capping certain deductions rather than eliminating them, which was taken seriously enough that Bloomberg had yours truly run a bunch of numbers quantifying what a cap would mean to the middle class. Yet tonight, Ryan made no mention of this potential $17,000/$25,000/$50,000 cap, and instead focused again on eliminating deductions. Either Ryan and Romney aren’t on the same page, or, much more concerning, there is no page.
Is it mathematically possible to fully pay for a 20% reduction in tax rates by eliminating deductions? Probably, as we’ve already covered that here. Is it possible without shifting a portion of the tax burden from those earning in excess of $250,000 to those earning less than the threshold? That’s up for debate, but it would require an extreme top-down approach, where the wealthy lost all their deductions first, and even then the result is in question. But the point is, neither Romney nor Ryan can know it’s possible, because they have no plan, only a framework.
And as a voter, you must keep this in mind, because you may be enticed by the promise of a 20% reduction in your tax rate, only to discover in April 2014 that your mortgage interest or state tax deduction is of limited or of no use, and your tax obligation has actually increased over prior years.
What I find most frustrating is that the calendar has turned to October, and I still can’t formulate an opinion as to whose tax plan — Obama’s or Romney’s — I prefer, solely because I don’t know exactly what Romney’s plan entails. Obama’s plan is unappealing to me for a number of reasons — not the least of which are the potentially damaging effect on the deficit and the painful ”Obamacare” surcharges – but at least it’s a known quantity.
One final thought for other tax eggheads: the idea that Ryan mentioned this plan and “tax reform” in the same breath is borderline offensive. True tax reform entails removing some of the countless loopholes from the Code for good, leaving the tax law more manageable than it was before. What Romney and Ryan are promoting is complexity to an unimaginable degree, attempting to cap certain deductions for a certain part of the population, while leaving the deductions in the Code for other taxpayers to enjoy.
On the bright side, it would keep me swimming in business.
The Obama administration addresses the math behind Mitt Romney’s $1 trillion $5 trillion tax cut. Wait…what?
Nation’s pastors agree to take a Sunday off from decrying same-sex marriage; taunt IRS instead.
From the WSJ: Be advised, the last chance to undo a Roth IRC conversion is October 15, 2012.
Xzibit — of “Pimp My Ride” fame — owes the IRS $130,000 for 2011. Weird, I would have thought that a guy who installs custom fish tanks into Honda Civics would understand the need for conservative spending and sound investment.
Could the U.S. really do away with corporate interest deductions?
Often ignored in the presidential campaigning is the growing problem of violence in the suburbs:
After we discussed some of the questions surrounding Mitt Romney’s mid-week proposal to achieve the necessary base broadening necessary to pay for his proposed 20% across-the-board tax rate cuts by implementing a $17,000 cap on a taxpayer’s deductions, Bloomberg reached out to me to crunch some numbers in order to determine the impact such a cap would have on a hypothetical family of four.
The Bloomberg article is here, but the full computations are below:
- Family income is all ordinary income from wages: $150,000
- Family has an outstanding 30 year mortgage at 5 percent with a beginning balance in 2012 of $300,000. This gives rise to deductible mortgage interest for 2012 of $13,666.
- Family lives in Ohio, where it pays real estate taxes on its home of $5,000 annually.
- Family contributes $4,000 to charity.
- Family withholds $6,000 in deductible Ohio state tax from wages
- Family’s taxable income would fall in what is currently the 25% bracket, but would be the 20% bracket under Romney’s proposed 20% across-the-board reductions. The rates would be 8% on the first $17,400 of income, 12% on the next $53,300 of income, and 20% after that.
- Under proposed Obama rates, (Scenario 2), the rates would be 10%/15%/25%.
Scenario 1: Using Romney’s Projected 2012 Tax Rates; No Cap on Deductions
Itemized deductions: $28,666
Taxable Income: $106,535
Taxable Income: $106,134
Federal Income Tax: $14,874
Scenario 2: Using Obama’s Projected 2012 Tax Rates; No Cap on Deductions
Itemized deductions: $28,666
Taxable Income: $106,535
Taxable Income: $106,134
Federal Income Tax: $18,783
Scenario 3: Using Romney’s Projected 2012 Tax Rates; $17,000 Cap on Itemized Deductions Only; Personal Exemptions Allowed in Full.
Itemized deductions: $17,000
Taxable Income: $133,000
Taxable Income: $117,800
Federal Income Tax: $17,208
Scenario 4: Using Romney’s Projected 2012 Tax Rates; $17,000 Cap Applies to BOTH Itemized deductions AND Personal Exemptions
Itemized deductions: $17,000
Taxable Income: $133,000
Taxable Income: $133,000
Federal Income Tax: $20,248
As you will see, because of the effect of Romney’s reduction in the tax rates by 20%, even when he caps a taxpayer’s itemized deductions — but only his itemized deductions — (Scenario 3: Federal Tax of $17,208), our hypothetical family of 4 will stay pay-less under Romney’s plan than it would under that of Obama (Scenario 2: Federal Tax of $18,783).
When comparing Romney’s plan without a cap (which would be nearly impossible if he plans to keep the rate cuts revenue neutral) to that of his plan with a $17,000 cap on itemized deductions, our family of four saw their federal tax increase by $2,333.
Now, if we assume Romney will cap the benefit of BOTH itemized deductions and personal exemptions at $17,000, as his campaign seems to have indicated this week — our family of four would pay more (Scenario 4: Federal Tax of $20,248) than it would under the Obama plan (Scenario 2: Federal Tax of $18,783). This would also increase our family of four’s taxes by $5,374 when compared to a Romney baseline with no cap, and $1,465 when compared to a Romney baseline where the cap applies only to itemized deductions.
The devil, of course, is in the details, and at this point, they are sorely lacking. On Wednesday night, Romney again referenced the possibility of using a cap to pay for his tax cuts, but this time quoted “$25,000 or $50,000″ as a potential solution, which would obviously change the results dramatically.
Lastly, and perhaps most importantly, the Romney campaign clarified this week that it would not seek to change the current tax-free nature of employer paid health insurance coverage, a change that would have greatly increased the tax burden of the middle class.
One hundred thousand views in a little over a year. That’s not too shabby. Though a closer inspection of this site’s hits reveals that many of our guests have stopped by unintentionally, and by the looks of it, left considerably disappointed. Below is a list of the Top 6 search terms that have led internet users to Double Taxation since its inception:
Canyonero: 886 (The fact that nearly 1,000 people came here because they were searching for the fictional SUV endorsed by The Simpsons’ Krusty the Clown warms my heart and renews my faith in humanity.)
Power Rangers Porn: 620 (For obvious reasons, this instantly renews my disgust for humanity)
Double Taxation: 606 (Picking a good blog title is key. Search engine optimization!)
Power Ranger Porn: 391 (You should all be ashamed of yourselves. Perverts.)
Tax Law Changes for 2013: 270 (I’m not sure what it says about the content of this site that it took until our fifth search term to yield a result that I actually wrote about.)
Things get slightly more comforting when we look at the most-read posts in our 16-month history:
Two things can be gleaned from this data:
1. People really seem to care about luxury audit for some reason, and
2. If you want to get page hits, here’s a simple yet full-proof business plan for any blog:
Phase 1: Put “porn” in title
Phase 2: ?????
Phase 3: PROFIT!
On the tax front, in advance of tonight’s presidential debate, Mitt Romney has finally started to cave to continuing pressure to share some details regarding his tax proposals; particularly, how he plans to keep his 20% acr0ss-the-board rate cuts revenue-neutral while not shifting the tax burden away from the rich and towards the middle class. In a speech given this week, Romney indicated that he might cap deductible itemized deductions at $17,000 per individual.
There are still a number of details missing — particularly whether the $17,000 would be doubled for MFJ and how the cap would handle credits — but according to Bloomberg, this cap is just the first in a three-part plan to achieve Romney’s tax goal of a cutting tax rates by 20% while remaining revenue neutral and progressive. From Bloomberg:
A second cap would apply to personal exemptions and a third cap would apply to the health care exclusion. The amount and details of the caps could be changed to meet Romney’s targets for revenue and distribution of the tax burden. The aide emphasized that the three-cap idea is only one option being considered.
While devoid of the details necessary to formulate any meaningful conclusion, it’s hard to see how this is a step in the right direction in achieving progressive, revenue-neutrual tax reform while also cutting rates. A study conducted by the Tax Policy Center earlier this year concluded that Romney would have to eliminate all deductions for those taxpayers earning in excess of $200,000 before limiting those deductions to a lesser extent to those earning below the threshold in order to pay for his tax cuts in a progressive manner. Clearly this proposal does not accomplish those goals, as it allows those earning over $200,000 to retain some of their deductions, while providing the same limitation to those earning below the threshold.
The key, in my mind, is how the third cap would treat excludable health care benefits, as this preference largely benefits the middle class. Do away with the Section 105 exclusion, and you will likely be right back to shifting the burden of tax increases to those taxpayers earning less than $200,000.
What I do like about Romney’s proposal, however, is that he could avoid the morass of trying to eliminate deductions and preferences from the Code, as any attempt to do so would leave special interest groups fighting to the death for their particular provision. By instituting a cap, you leave the mortgage interest deduction untouched, leave the state and local tax deduction, and leave the charitable contribution deduction in the Code, but cap their benefit. While this doesn’t neceessarily achieve the simplicity one seeks when base broadening, as it leaves those provisions in the Code, as we’ve discussed here before, sweeping Code reform isn’t particularly likely anyway.
Boy, that Tebow trade has really added a dynamic new element to the Jets’ offense, no?
A few pictures from a Sunday spent in and around Leadville, CO, the highest (think altitude, not reefer) incorporated city in the U.S.
So this is why my college years were so lonely. All the chicks with loose morals were economic majors.
If everyone’s so fired up about the 47% of Americans who don’t pay income tax, perhaps we should tax them. Howard Gleckman has five ways you could do it. His most novel suggestion: fix the economy and get people working again.
Hey, maybe Romney’s plan to cut rates while keeping tax revenue level is possible. After all, it worked for Reagan.
From the WSJ: Is your political contribution tax-deductible?
After spending three weeks in Aspen as my family’s indentured servants, my parents set off on their return to New Jersey this morning. And let me tell you, there is no more relaxing, stress-free process than preparing two 70-year olds for a day of air travel. Reminds me of this bit of genius from The Onion:
On the tax front, we here at Double Taxation are determined to keep our comparison of the presidential candidates’ tax proposals as current and accurate as possible. But it’s not always easy. For example, the staple of Mitt Romney’s plan has been the “20% across-the-board” reduction in the individual income tax rates, resulting in a decrease of the top rate from 35% to 28%.
Romney has also promised that his tax cuts won’t increase the deficit, meaning he’ll raise an offsetting amount of tax revenue elsewhere, largely through the reduction of existing deductions and preferences.
As we’ve discussed, once the math-types put these two concepts together, they revealed a couple of glaring holes, the most publicized of which was the notion that the tax rates could not be reduced while remaining revenue neutral without shifting a significant amount — $86 billion — of the tax burden from those earning in excess of $250,000 to those with income below that threshold.
While Romney’s camp continues to question the accuracy of the criticism, they’ve now got a backup plan. According to advisor Kevin Hassett, Romney would rather back off his promised tax cuts then raise taxes on the poor.
If you think the base-broadeners don’t add up, if you think he can’t get to 28 percent, then the right thing that would happen, as you know, if you’re going to have a revenue-neutral reform, is that they would have a different change in rates.
Governor Romney says he can get to 28 percent. He believes he can get to 28 percent. When he’s in office, he’ll try to do it. But if Congress won’t give him the base-broadening he needs to get to 28 percent, there’s no way in hell that anyone believes that he’s going to increase taxes by $2,000 on people with incomes below $20,000. I just can’t believe that the Obama campaign would say that, and that an economist for the Obama campaign would be up here repeating these stupid and inane talking points.
What’s the point? This goes without saying, but simplifying the tax code will not be an easy process. Most experts agree that the optimal tax system is one defined by lower rates and fewer deductions, and that is most certainly not the system we have in place today.
Romney’s proposals are a step in the right direction, but voters need to understand that such an undertaking requires flexibility. The remarks from Romney’s advisor will likely be targeted by Democrats as a sign that Romney is going back on his campaign promises, but to hold Romney to the specific points he set forth in his proposals and not afford him several alternatives to reach the desired result — revenue-neutral tax simplification that maintains the progressivity of the Code — is an unfair reaction that serves only to stand in the way of much needed tax reform.
Unless you’ve been living in a cave, you likely already know that Mitt Romney created a bit of an uproar when, behind closed doors, he suggested that because 47% of all Americans pay no income tax, they will vote Democratic “no matter what;” the theory being that Romney’s proposals to cut income tax cannot resonate with a group that pays no income tax.
Now, obviously, there’s no way to link tax filings to voter records to test the accuracy of Romney’s statement, but we can learn a bit more about who comprises this tax-indifferent 47 percent. And to that end, the Tax Policy Center’s got us covered with Five Myths About the 47 Percent.
Among the more interesting tidbits:
- The TPC estimates that of the 47% percent, only 0.1% earn income in excess of $200,000. That would indicate that fewer taxpayers are “gaming the system” than some would have you believe.
- Rather, the vast majority of people who pay no federal income tax have low earnings, are elderly or have children at home. Furthermore, fewer than half of individuals in households with incomes below $30,000 voted in 2008, compared with about 60 percent of people with higher incomes. And because these lower income taxpayers do — when they vote — tend to vote Democratic, it appears Romney may actually benefit, rather than suffer, from this tax-indifferent — and apparently — election-indifferent — portion of the population.
- Many of the taxpayers who pay no income tax are not the beneficiaries of Democratic “safety net” legislation, but rather bipartisan efforts to help those in need. For example, Presidents Ronald Reagan and Bill Clinton both favored the earned-income tax credit (EITC), which has helped millions of families stave off poverty.
We’ll hit this weekend’s roundup in a moment, but first, a public service announcement: At the risk of sounding unpopular, with the dawn of a new NFL season, please allow me to remind you that regardless of what you may think, no one — and I mean no one – cares about your fantasy football team.
On to the tax stuff…
As you may have heard, the Democrats threw their once-every-four-year soiree last week, and despite what The Onion might have said, the DNC involved more than just applauding the image of a dead Osama bid Laden for three hours. No, there was some actual tax policy discussion going on, and now that both the Republicans and Democrats have finished their little pep rallies, the interwebs are rife with reaction from tax eggheads:
The Tax Foundation crafted this analysis comparing Romney and Obama’s tax plans to the one devised by the Simpson-Bowles Commission, a bipartisan group established in 2010 and charged with recommending a tax plan that would simplify the Code while reducing the national deficit. The conclusion? While neither plan mirrors that of the Commission, Romney’s proposals — if politically possible to implement — come much closer to meeting the Simpson-Bowles goals of cutting rates and eliminating deductions in a manner that leads to a decreased deficit, economic growth, and a simplified tax code.
Next, Howard Gleckman over at the Tax Policy Center sums up both conventions — and bipartisan politics in general — wonderfully by pointing out that both Romney and Obama spent all of their time taking issue with the other candidate’s plans, neglecting to ever clarify the proposals for tax reform they would enact if elected.
Lastly, David Johnston at Reuters published a scathing column attacking the tax goals of the Romney-Ryan campaign, arguing that the Republican income tax proposals would further enrich the super wealthy while nearly doubling the income tax burden of the middle class, while their push to remove the estate tax would create a nation of dynasties that would have a devestating effect on economic growth.
In non-convention news, Kelly Erb over at Forbes has this tidbit: Hustler Magaizine publisher
Woody Harrelson Larry Flynt is offering $1,000,000 cash for the unpublished Romney tax returns. Wonder why he hasn’t just brokered a deal with these guys?
Finally, allow me to send you off into the workweek with this wonderful montage of the slow transformation of Breaking Bad’s Walter White from mild-mannered chemistry teacher to ruthless meth kingpin. [May not be safe for work. Unless you work in a meth lab, in which case it should be fine.)
I hope you enjoyed your long weekend. I certainly had myself a nice little Saturday.
An old friend came to visit, and we spent the morning and early afternoon touring the better part of the Aspen-Snowmass wilderness on our mountain bikes:
where we ran into this little guy:
Don’t be fooled, he’s smarter than the av-er-age bear. While we were riding, he stole our pic-a-nic basket!
After 4 hours and 4,000 feet of climbing, there was just enough time for a celebratory beer and a late lunch before heading off to the Mumford and Sons show, as they were headlining the annual three-day long Jazzfest festival. Sadly, we didn’t have enough time for Bed Bath and Beyond.
On to the tax stuff:
Tax Vox has the update to Mitt Romney’s tax proposals arising from the RNC. The most notable item: the Republican presidential candidate vowed to protect and preserve the deduction for charitable contributions, making his promise to lower tax rates by 20% while keeping the plan revenue neutral even more difficult to achieve (if you ever believed it was possible in the first place.)
Feel free to take Section 179 on that vineyard of yours.