President Obama's new line of attack against Mitt Romney is that the Republican's tax plan would raise taxes on everyone except for the very wealthy:
“Pay attention here,” Mr. Obama said. “Folks making more than $3 million a year — the top one-tenth of 1 percent — they would get a tax cut under Mr. Romney’s plan that is worth almost a quarter of a million dollars. Hold on, it gets worse,” he added to a chorus of boos. “My opponent says he’s going to pay for this $5 trillion plan. But under this plan, guess who gets the bill for these $250,000 tax cuts? You do. And you don’t have to take my word for it.” Mr. Obama cited a new study from the nonpartisan Tax Policy Center of theand the Urban Institute, two centrist Washington-based policy research organizations. The analysis concluded that the sort of tax code that Mr. Romney has proposed “would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers.”
(1) Right out of the gate, let's acknowledge that this is at least a legitimate and relevant subject of debate. Most of the Democrats' anti-Romney attacks have involved lying about his business record ("Four Pinocchios"), lying about his stance on abortion ("pants on fire"), and accusing him of being a criminal on two separate occasions, each time with zero proof. Therefore, a debate about tax plans and how they'd affect the country offers a welcome respite from silly season.
(2) As he distorts Romney's tax plan on the stump, the president bases his claim on an "independent" study. He fails to mention that this report was co-authored by one of his former advisors.
(3) As Phil Klein notes, the study itself doesn't even purport to "score Romney's plan directly:"
Yet here’s what Obama said yesterday at a campaign stop in Mansfield, Ohio:Just today, an independent, nonpartisan organization ran all the numbers on Governor Romney’s plan.
(4) AEI's Jim Pethokoukis runs down a litany of issues with the study's methodology and (crucially) growth assumptions, although he and I agree on one point: More details from Romney are in order. The presumptive nominee has given us the fun part (20 percent across the board rate reductions), without outlining the pain (which deductions will be limited or eliminated?) This makes sense politically, because the more details Romney reveals, the more Democrats will cherry-pick and twist them into attacks. So while I understand why Team Romney is reluctant to tip its hand too much here, we'll need more complete information eventually.
(5) Pethokoukis suggests one intriguing way for Romney to mitigate some of this criticism -- embrace the Obama Fiscal Commission's tax plan:
So basically we would have a simpler system, less vulnerable to crony capitalism, with a top marginal tax rate back to where it was during the Reagan years. And on top of that, the corporate rate under Simpson-Bowles would be 28% vs. 35% today, helping offset the minor-though-regrettable rise in capital gains and dividend rates. One objection from the right is that this plan would raise taxes. This portion of the S-B plan would raise tax revenues, on a static basis, by $785 billion over a decade due to fewer tax breaks. But given the huge drop in individual and marginal rates — plus the efficiency gains from a less distorted system — I have a hard time believing this would not grow the pie, leaving taxpayers far better off than they would be after a decade of slow growth or Lost Decade.
This would undoubtedly prompt significant push-back on the Right, but I'm inclined to agree with Pethokoukis on the net positive effect. He also describes the tantalizing political advantages of embracing the Simpson/Bowles tax structure:
The political benefits would immense. Romney would be adopting the plan of Obama’s own bipartisan debt commission, which Obama stiff-armed after promising Simpson and Bowles that he would endorse its recommendations. (One big reason Obama rejected it is because it lowers marginal rates and keep taxes way too low to finance future liberal spending plans.) Romney would look like a leader who wants to get things done in 2013. And since the plan would actually result in Romney paying a great percentage of his income in taxes, it would help inoculate him on the fairness issue.
Obama would surely demagogue the plan anyway, but Romney could turn around and hammer him over the fact that it's derived his own debt commission's proposal, which he ignored. (He appointed this commission after deriding and dismissing commissions as a candidate). It could also open the door to a renewed and serious discussion of entitlement reform, which Simpson/Bowles laid out and Obama neglected.
(6) The president has the vapors over Romney's "plan" to raise taxes on the middle class. Complication: His own policies have actually raised taxes on lower-income voters many times over. They've done so mostly through a litany of Obamacare taxes, including the mother-load: The mandate tax. Obama's current tax plan (calling it a "plan" is generous) involves destructive hikes on "the rich," including nearly one million small businesses. These businesses account for more than half of small business income in America. The Obama hikes would not dent the debt (Democrats want increased revenues to fund more spending anyway), but they would kill 700,000 jobs. Just what the economy needs! Wouldn't you say so, 2010's Barack Obama?
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