Mitt's move to the center last night leaves me puzzled. (Actually, the Mitt of last night was, I think, to the left of Obama on many issues.) One issue that puzzles me most is this idea of capping deductions.
Here is my confusion:
If deductions are capped at say $17,000 or $50,000 and the cap gets smaller as income increases, why will this not be devastating to small businesses and farmers?
My understanding of the way farming works comes from my own family and in-laws. I have never looked at the actual tax documents, but neither farm is a small business. It is a true family farm. In both cases, the sale of crops is the "income" of the individual farmer. The income is quite large: corn is approximately $7.50/bushel. The farm produced a little over 100 bushels/acre this year (bad year due to drought). About 300 acres are put into corn. The income for the corn crop was around $225,500. That puts them in the top 1% for income and would mean that, according to Romney, no deductions. No deductions for equipment (combines, tractors, etc.). No deductions for inputs (seed, fertilizer, pesticides). No deduction for fuel. No deduction for land mortgages or the interest on the loan to buy the seed before it is planted.
Currently, the $225,000 income would be in the 33% tax bracket. Even if Romney were to get the 20% tax reduction, that would only reduce it to 26.4%. The taxes would be $59,400.
My father-in-law once told me that his best year of farming, he netted $13,000. I think there may well be some items that farmers deduct that may not need to actually be deductions, but the $13,000 number stuck in my mind.
I know Obama was not at his best last night. And, I am not sure he was even really thinking about what Romney was actually saying, but I would hope that he would do better at thinking through implications and ramifications of the lies that Mitt makes up on the spot and is so proud of.