We Don’t Know What Romney’s Tax Plan is Yet, but it Will Benefit the Rich and Burden the Poor

We Don’t Know What Romney’s Tax Plan is Yet, but it Will Benefit the Rich and Burden the Poor

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Can we at least wait until we get the details on Romney’s plan before we start hyper-analyzing it?

The New York Times is reacting with glee that the Tax Policy Center has concluded that Mitt Romney’s tax plan will give tax breaks to wealthy individuals and cause taxes to rise for non-wealthy individuals. One small glitch, though, it isn’t Romney’s plan that the TPC has analyzed (emphasis is mine):

A tax system overhaul along the lines that Mitt Romney has proposed would give big tax cuts to high-income households and increase the tax burden on middle- and lower-income households, according to an analysis from economists at the Tax Policy Center.

The researchers did not analyze the exact Romney plan, since it is incomplete and the researchers were reluctant to make assumptions until the campaign released more details.

Instead they created a model for a revenue-neutral income tax change that incorporates some of Mr. Romney’s proposals, which include lowering marginal tax rates, eliminating both the alternative minimum tax and taxation of investment income of most taxpayers, doing away with the estate tax and repealing the additional high-income taxes passed with the Affordable Care Act.

The TPC authors, Samuel Brown, William Gale and Adam Looney conclude that,

It is not possible to design a revenue-neutral plan that does not reduce average tax burdens and the share of taxes paid by high-income taxpayers under the conditions described above, even when we try to make the plan as progressive as possible.

This is rather obvious. You can’t give income tax cuts to people who don’t pay income taxes and right now about 50% of Americans don’t pay income taxes. In short, if you’re going to give tax breaks, you have to give them to people who are actually paying taxes, welfare credits like the EITC notwithstanding. And even if Romney’s plan does give tax breaks to the wealthier amongst us (i.e. those who actually pay taxes), he would merely be making the system more, not less, fair. The rich already fund the lion’s share of the federal government.

The left’s consistent attempts to paint Romney as a benefactor of the rich and privileged at the expense of the poor and disadvantaged is almost as annoying as a middle of the back itch and twice as tired. Let me give you an illustration:

  1. I let a friend stay rent free in my garage apartment for two years.
  2. I pay everything. He pays nothing.
  3. One day I send him a letter telling him that I will have to start charging him rent.
  4. His response: You are placing all the burden on me and that’s unfair.

I don’t think it’s a reach to characterize the strategy of progressives like this: Let’s make those in the earning class give money to those in the non-earning class and when they object accuse them of being heartless bastards.

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida

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Comments

  1. Great post, very helpful! Thanks!

  2. Rakan Alhuthali says:

    This is an interesting article about Romney tax plan. I agree that many people assume that Romney’s tax plan will only help the rich Americans. This is because Romney was not very clear on his tax plan. I am shock with the information that the author provided that rich people are the ones that pay most of the taxes since many middle and lower class Americans do not pay taxes.

  3. so…how do we get that other half to pay their taxes?