How we carry them out would be lowering the rate, the tax rate, across the board and then making up for that both with additional growth and with putting a—a limit on deductions and—and exemptions, particularly for people at the high end.So according to to Mitt Romney, his tax plan has three main features:
- First, cut everybody's taxes by lowering rates "across the board." (He's previously said the rate cut would be 20 percent.)
- Second, partially offset the costs of that tax cut by limiting deductions and exemptions, "particularly for people at the high end" of the income scale. (Later in the interview he suggested accomplishing this with a cap of between $25,000 and $50,000 on such deductions.)
- Third, pay for the rest of his tax cut with economic growth.
That third point is essential, and it goes to the heart of the problem with Romney's tax plan, because with that third point Mitt Romney is explicitly conceding that his tax plan math doesn't add up without the magical math of tax cuts that pay for themselves.
Mitt Romney says that under his plan, the wealthy will pay the same amount of taxes as they do now, but by the logic of his own proposal, that could only be the case if cutting taxes on the wealthy leads to an economic boom. Without an economic boom, the tax cuts won't pay for themselves. Instead, the wealthy will walk away with a a 20 percent tax cut, but the middle class will be left holding the bag in the form of even bigger deficits and draconian budget cuts.
It would be one thing if there were any precedent showing that Romney's plan would work, but there isn't. In fact, what Romney is proposing is exactly the same thing as Bush proposed in 2000—and we wall know what happened when we tested his theory. If there's any major difference between the two plans it's that Romney's plan would add new tax cuts on top of the old, Bush tax cuts—so it would be an even bigger mistake.
Romney tries to sidestep the reality of his tax plan math by pushing the notion that all he's trying to do is reduce taxes on small business job creators. Here's what Romney said during last week's debate:
And you'd think, well, then why lower the rates? And the reason is because small business pays that individual rate; 54 percent of America's workers work in businesses that are taxed not at the corporate tax rate, but at the individual tax rate. And if we lower that rate, they will be able to hire more people. For me, this is about jobs. This is about getting jobs for the American people.Sound familiar? Compare it to what Bush said in 2004:
Do you realize, 900,000 small businesses will be taxed under his plan because most small businesses are Subchapter S corps or limited partnerships, and they pay tax at the individual income tax level. And so when you're running up the taxes like that, you're taxing job creators, and that's not how you keep jobs here.So, yes, Romney sounds just like Bush. And yes, Romney's plan is rooted in magical tax plan math, just like Bush's plan. And it would be just as big a disaster—if not even worse.
Meanwhile, President Obama is proposing the same thing that President Clinton signed into law in 1993: modest increases on top taxpayers so that we can reduce the deficit and pay for the kinds of investments we need to support long-term economic growth. Unlike the Romney-Bush plan, Obama-Clinton plan will work. It worked then, and it'll work now.