August 03, 2012
When it comes to tax plans, it’s all just so confusing. Or at least that’s what the NYT seems to be telling us.
The NYT ran an article that reports on a study by the Tax Policy Center that showed Governor Romney’s tax plan would lead to a large reduction in taxes for the wealthy, while raising taxes for everyone else. It then cites Romney’s claim that his tax plan is similar to the one developed by Morgan Stanley director Erskine Bowles and former Senator Alan Simpson, the co-chairs of President Obama’s deficit commission. The piece goes on to tell readers:
“The Simpson-Bowles plan called for reduced income tax rates, but it would have raised about $2 trillion more in tax revenues over 10 years, mostly from high-income taxpayers.”
Wow, this should really leave us scratching our heads. After all, if Romney’s plan is similar to the Bowles-Simpson plan, and the Bowles-Simpson plan would raise $2 trillion, mostly from high income taxpayers, then the Romney plan must also increase revenue from high income taxpayers. But, then the Tax Policy Center study would be wrong. What is a careful NYT reader to think?
The NYT could have resolved this seeming paradox by pointing out an important difference between the Romney plan and the Bowles-Simpson plan. Romney has explicitly said that he would not change any of the tax incentives for saving. This means that he has ruled out raising the tax rate on capital gains and dividends or curtailing some of the tax benefits for IRAs and 401(k)s. This makes his plan much more friendly to upper income taxpayers, who are the primary beneficiaries of these tax breaks.
Perhaps the NYT assumed that all its readers already knew about this difference between the Romney plan and the Bowles-Simpson plan, but it still would have been worth reminding them.
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