Skip to main content

Mitt Romney is playing coy with his proposals, revealing as little as possible about his plans for when he gets to play President, lest voters get wind of them, and then not vote for him.

Still, some details have slipped out to voters who matter - big donors - and the little we've heard isn't pretty.

Not suprisingly, other than ending the deduction for interest on a second home mortgage, the plan favors the wealthy. After letting the Bush tax cuts become permananent, he'd slash tax rates another 20% across the board. Nevertheless, he is trying to claim that his plan is favorable to the middle class, by cutting the tax on earned interest, dividend income, and capital gains. Notwithstanding that seniors on a fixed income do live on retirement portfolios, this is not a major income source for the middle class. The middle class derives only 3.9% of the preferential tax treatment of capital gains and dividends. So Romney might have a hard time convincing middle class voters that this will help them.

But he's trying:

"I'm going to keep the burden on the upper-income people the same as it is today," the Republican presidential nominee-in-waiting said as he campaigned across Pennsylvania on Tax Day. "I know Democrats will say it day in and day out, `They are for tax cuts for the rich,' he said, mimicking his rivals. "No,'" he added firmly.

He favors extending all the Bush-era tax cuts that are set to expire at the end of the year, and has said he wants to cut rates an additional 20 percent across the board.

Romney has also said he would reduce or eliminate some common tax breaks used by the wealthy to make up some of the revenue that would be lost.

But he has yet to provide much additional information, or even define what he means by "wealthy."

In his conversation with Thomas and others around the picnic table, Romney emphasized that middle-income Americans would benefit from his proposal to eliminate taxes on interest, dividends or capital gains for anyone earning $250,000 or less.

What seems more ominous is his proposal to eliminate the deduction for local and state taxes. This seems to be targeted right at voters in blue states who pay the highest local taxes, and give more of them to Washington then they get back. This seems to be the zombie revival of a similar proposal during the Bush admininstration that looked like it had died.
But Romney’s announcement that he could well end the deduction of state taxes is the real bombshell.    

And because of the red state/blue state divide, there is a compelling political argument for the big policy idea: it would mostly punish blue-state voters who aren’t going to back Romney anyway.

That’s because blue states generally have higher state and local taxes. For example, many Californians and New Yorkers—nearly 50 million Americans—would see their taxes go up significantly.  

That's one sixth of the population that would see its taxes go up, but all in two blue states.

Closing this loophole would have no effect in Texas which has no income tax, or Florida (where Romney was speaking) Alaska, South Dakota, Washington and Wyoming.

But significantly—and here’s the political risk—many swing states would be affected, including Colorado, Iowa, New Mexico, North Carolina, Ohio, Pennsylvania, and Virginia.  
This is very lopsided and unfair strategy, favoring the red states. States like New York and California have high taxes because they have generous social programs, like Medicaid, unemployment, SNAP, etc. So residents of these states would get punished for helping to raise the revenue to pay for such programs. And, since local taxes tend to be much more regressive than federal ones, it would hit the middle class and even the poor (who of course Romney is not concerned with) much harder, despite Romney's claims to the contrary.
The Romney camp would be quick to counter that his plan for an across-the-board tax cut would more than offset these lost deductions, but the idea of eliminating the local tax deduction gives Team Obama new argumentative ammunition in its courting of the middle class.
Except that it wouldn't.   Even the $860 billion that elimination of the state tax deduction would generate over a decade would still only fill 20% of the fiscal hole his tax cuts would create, as the Atlantic demonstrates.

Originally posted to Barefoothoofcare on Wed Apr 18, 2012 at 05:44 AM PDT.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Tip Jar (4+ / 0-)

    "I'm sculpting now. Landscapes mostly." ~ Yogi Bear

    by eXtina on Tue Apr 17, 2012 at 08:14:04 PM PDT

  •  Another Republican tax cut with higher deficits? (2+ / 0-)
    Recommended by:
    eXtina, tikkun

    Color me shocked -- I would never in a million years have guessed that.

    I wonder if Romney actually thinks he can stonewall voters and the press on his plans, his taxes, and keep lying 24/7 all the way till November and get away with it?  The blithe dishonesty and cynicism of his campaign is shocking, even in our present degraded political state.

    When Free Speech is outlawed, only outlaws will have Free Speech.

    by Dallasdoc on Wed Apr 18, 2012 at 06:25:50 AM PDT

  •  Damn This Is Subtle Thinking On Their Part (2+ / 0-)
    Recommended by:
    eXtina, lastlegslaststand

    One result of this tax in the long run would be the neutralization of blue power states as people run from the increased cost of both taking care of citizens and directly subsidizing the corporate and national security government that works against them.  This would run up the population of states that are controlled by ALEC or its future offspring, and it would give them greater numbers of representatives in congress.  For all my loathing of them gotta say, they know what they're doing.

    Newt 2012. Sociopath, adulterer, hypocrite, Republican.

    by tikkun on Wed Apr 18, 2012 at 06:44:19 AM PDT

  •  And this is why tax reform is so hard. (2+ / 0-)
    Recommended by:
    nextstep, VClib

    For every deduction, there's a constituency out there that thinks it's vital and that getting rid of it is deeply unfair.  

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site