Governor Romney released an ad yesterday accusing President Obama of lying about Romney's plan for a "Five Trillion Dollar Tax Cut."
Unfortunately for Obama, Romney may have a point--his plan is to cut taxes by $5 trillion, but to make the cuts revenue-neutral by eliminating tax subsidies in the Federal tax code. Unfortunately for Romney, Obama may have a point--the total amount of tax subsidies Romney has actually endorsed eliminating rounds down to zero.
This renders Romney's Tax so-called-Plan little other than the second great Republican party variation of the Underwear Gnomes' approach to finance and Capital:
- Cut Taxes
The first great variation, of course, is the "cut taxes now and we'll cut spending later" scam introduced by President Reagan and perfected by President George W. Bush. Since nobody believes those stale and decrepit lies anymore, it was obvious Romney had to tell a fresh and invigorating lie, so, he's pretending he'll "cut taxes now and cut deductions later." which would be fine, if "later" ever arrived, which it never does when Republicans are in charge.
However, let me offer you, dear reader, a chance to transform Mitt Romney's Tax so-called-Plan into, well, a Tax Plan.
Using the two major projections of the size and scope of tax subsidies, The Executive branch's Office of Management and Budget and the Legislative branch's Joint Committee on Taxation, the Pew Foundation has created a comprehensive database of all the loopholes and deductions in the Federal Tax code.
So. All you have to do is go to the database, cast your eyes over to 2013 (or 2014 if you think Romney isn't lying and could take a reasonable 9 to 12 months to get his so-called-Plan through Congress) and pick enough tax deductions to add up to $500 billion annually. You should note that while the projections from OMB and JCT are pretty close in their ultimate total cost, because of different assumptions and definitions many of the specific figures diverge, at times significantly. So no fair mixing individual figures from different projections or years. Pick one or the other, add it up to $500,000,000,000, and there ya go--you've created a real Plan, not a cartoon caricature of a plan. But--
Remember, you need a LOT of revenue, so while it might be fun and easy to mock the Empowerment Zone Business tax credits, even the larger figure only gets you six-tenths of one percent toward Romney's goal. You really can't get there from here without at least one and probably two or three of the big ones.
Let me show how it's done. I'm going to use the Executive branch projections for 2014. First thing to go is the Exclusion of employer contributions for medical insurance premiums and medical care. That gives me 211 of the 500 billion I need right off the top. It's politically a very tough sell--the Chamber of Commerce will have a tantrum--but I think Romney can do it, especially if he also grabs the seemingly trivial 4 billion in Credit for employee health insurance expenses of small business. You see, this latter is a provision of the ACA so Romney can pretend he's "repealing" part of it. So that's 216 billion so far.
Toss out all the energy tax credits accompanied by some tree-hugger punching, for about 5 Billion, all agriculture tax credits for 1 billion, all transportation tax credits for 5 billion, and all science, space and technology tax credits for about 9 billion and we've upped our total to about 235 billion.
We're almost halfway there already! But it's getting harder to put them together without generating either an unfeasible political conflict in Congress or raising taxes on those in the middle or bottom quintiles of income. Or without triggering obvious negative consequences. For instance, I could dump the Accelerated depreciation of machinery and equipment for 58 billion, but that would no doubt damage investment in machinery and equipment in the manufacturing sector when the economy is still pulling out of a deep crash. So skip that. I figure if any sector deserves to get smacked upside the head with a two a by four, it's housing.
So. Say good-bye to the Home mortgage deduction. That gives us 122 billion to play with. Also, off with the heads of the Capital gains exclusion on home sales for another 43 billion. We get the last 28 billion by killing off the Deductibility of State and local property tax on owner-occupied homes. The bonus to ripping the heart out of these deductions is that the housing sector is already so screwed up it's pretty hard to make it worse. And there's a possibility that removing the deductions may increase economic activity as buyers and sellers try to re-set in anticipation of the changes.
We're at 428 billion now of the 500 we need to make Romney not be an Underwear Gnome. We can grab most of the rest of what we need by eliminating the Reduced rates of tax on dividends and long-term capital gains--47 billion, for a running total of 475 billion. I could snag it all by eliminating the deduction for all charitable contributions, but I think I'll limit it to only the Deductibility of charitable contributions (education) and the Deductibility of charitable contributions (health) for 5.5 billion each. The health care system shouldn't need charity and most education donations are either ineffective or a scam.
So I guess I'll close the final gap by eliminating the Deduction for U.S. production activities, worth 16 billion in 2014 and bringing our grand total to 502 billion--right on target. That'll tick off a bunch of folks, but so what? Romney's a globalist capitalist anyway, so it'd be right in character.
So there ya go. If I can do that in a single afternoon, why can't Romney in a whole campaign? And if Romney can't do that, why not?