October 05, 2012
The Washington Post ran a front page piece on Governor Romney’s debate performance that was headlined, “Romney benefits from rigorous defense of tax plan.” The article begins:
“With his forceful denial of charges that he would raise taxes on the middle class, Mitt Romney used Wednesday’s debate to launch an aggressive new effort to regain his footing in the battle over taxes.
In one of the debate’s first exchanges, the Republican presidential nominee directly challenged President Obama’s assertion that Romney’s tax plan would finance big new breaks for the wealthy by wiping out popular deductions for those who earn less than $250,000 a year.”
As the article later explains, Romney’s assertion is inconsistent with his past description of his tax plan. Romney proposes to cut income tax rates by 20 percent but also to have a deficit neutral tax cut. He argues that the lower tax rates will be offset by eliminating tax deductions.
However, it is not possible to make up the lost revenue from lower tax rates on the wealthy simply by taking away tax breaks for the wealthy. (Romney explicitly rejected raising the tax rate on capital gains or dividends, so the main tax break for the wealthy is off-limits.)
The point here is very simple. If you cut Warren Buffett’s tax rate by 20 percent you will not get back the money by taking away his mortgage interest deduction. This is why every independent economist who has analyzed the tax cut has said that Romney’s plan implies large tax increases on middle income families. However the Washington Post is apparently proud of Romney for denying for boldly denying this fact.
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