Tag Archives: Tax Policy Center

Romney’s Tax Plan

A recent report from the Tax Policy Center is showing that the Romney tax plan will result in an added tax burden on folks with the lowest incomes:

Our major conclusion is that any revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers.

I haven’t read all of the report nor have I taken much time to study the plan offered by the Governor.  However, the broad brush strokes seem to be that there would be a 20% reduction in the tax rate at all tax brackets.  Further, Romney would broaden the base by eliminating deductions.  Last, Romney claims that his policies would spark the economy into 4% growth as opposed to the anemic sub 2% that we’ve grown accustomed too.

It should be no secret that I’m a small tax small spend kinda guy.  So I’m a little concerned that the main thrust is surrounding tax rates and not spending rates.  Cutting taxes is fine, but unless we shrink government, we’re only left with larger deficits.

I’m also a big believer in the concept of the Laffer Curve.  This is the idea that tax rates of 0% and 100% will result in the same amount of tax revenue.  And that as tax rates increase from 0% more and more tax revenue will be generated until a peak is hit at which point any further increase in the tax rate will result in lower revenue.  I think this is true.  It’s important to emphasize the concept of both sides of the curve and I think that Romney may be forgetting the 0% side and arch of the philosophy.

I’m not so optimistic that we’re sitting on the exact right peak right now and that either a tax hike or a tax cut would reduce revenue.  But I think there might be better ways to spur the economy without introducing tax cuts.  For example, end this continued nonsense surrounding the extension of the Bush tax cuts.  Make ’em permanent and move on.  The taxes in Obamacare?  Remove them too.

Right now, I think that tax certainty would be a sufficient spark to the economy and one that could generate the 4% growth Romney is targeting.

I’ll leave the discussion with one caveat.  I think that we need to reduce our corporate tax so that we’re among the most competitive in the world in this space and not the worst in the world.  Further, I would edit the code to say that all earnings realized in a foreign nation and taxed at the national rate can be brought to America without being subject to further American corporate taxes.  It’s hard to defend the practice of taxing money earned in France, using French -ahem- roads and bridges and then taxing that money further for the construction of American roads and bridges.

The Debt Limit, Budget, Deficit and Debt: Update

So, yesterday I posted about a possible solution to the deficit and the debt. In those plans I accommodated those on the right who insist on a plan that includes no new revenues due to tax increases.  Further, I accommodated those on the left who insist on a plan that doesn’t cut; in fact my plan GROWS government each and every single year.

As I ended my analysis I demonstrated a method by which both of those targets were met AND we backed away from the debt limit that we are struggling with today.  The solution began to reduce the the deficit in year 1.  And it balanced the budget in year 19.  It’s the perfect trifecta.

But what if we can do better?  What if we can reduce the amount of time in which we are free of the deficit?

I think we can:

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The Debt Limit, Budget, Deficit and Debt: Framing the Picture

The talk of the town is the debt limit.  Raise it or not raise it; and what it would take TO raise it.

Reasonable people can agree on a couple of things:

  1. We are in debt and it’s getting worse.
  2. To balance the budget, there needs to be a combination of an increase in revenue and a decrease in spending.

I honestly feel that if you were to ask this question, hidden in such a way as to bypass the normal political partisanship, every single American would agree.  If the checking account is overdrawn, a second job becomes something to consider and a review of the household spending becomes a priority.

But, how do we agree on such a combination when the discussion changes from the household budget to the federal budget?  How can we get folks who demand that we raises taxes together with folks who demand we don’t?  How do we get people who refuse to cut spending to shake hands with those who feel we HAVE to cut spending?

I propose that we do it by doing neither.


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