
The Romney tax plan uses some funny math
Editor’s note: We always welcome article submissions from our readers. Today’s contribution comes from PWS.
The Romney tax plan has stimulated the sharpest and most entertaining exchanges among academics and policy wonks. Both camps, Obama and Romney, are able to use the very same papers to prove that the plan raises taxes on the middle class, or doesn’t, increases growth, or doesn’t, achieves revenue neutrality, or doesn’t. I’m surprised no one’s claimed it’ll bring Middle East peace, or won’t.
I can’t do justice to the debate in a single post, so in this one I’ll look at the Romney Tax plan and the first study that evaluated it, from the Tax Policy Center at the Brookings Institution.
The bare bones of the tax plan are to:
- Cut individual rates in all brackets by 20 percent
- Eliminate the estate tax
- Eliminate the alternative minimum tax
- Eliminate additional taxes on high income taxpayers caused by the Affordable Care Act (ACA, or Obamacare)
- Eliminate ‘tax expenditures’ to broaden base and keep the provisions ‘revenue neutral’. Tax expenditures include both deductions from and exclusions from income (e.g. both Medical Expenses and the preferential rate on capital gains).
Since the “bare bones” are all the Romney camp ever released, the various commentators have had to fill them in with reasonable assumptions. In particular, it’s not clear what the base is with respect to which it would be “revenue neutral”, no indication was given of what tax expenditures would be cut to make up the revenue shortfall, and although the plan promised no additional taxes on “middle income” taxpayers, the income floor was left undefined.
The Tax Policy Center (TPC) issued an analysis of the Romney plan August 1. Since detail was woefully lacking in Romney plan, the TPC made some reasonable assumptions:
- Lowering of corporate rates would be accompanied by reducing corporate tax expenditures by the same amount. Thus its analysis would only include individual income tax changes. However, as the TPC said, adding in the corporate tax reductions would make taxes more regressive.
- The Romney plan would not change tax expenditures for savings and investments, including capital gains, dividends, interest on state and local bonds, exclusion of gain on the sale of a home, non-taxed increase in value of life insurance policies (bet you never thought of that as a tax preference, eh?),
- The model assumes that all tax expenditures would be eliminated for the highest income level first, and only on eliminated lower income levels after they’ve been exhausted for the higher ones.
- The baseline used to measure is the “current policy” baseline: Permanent extension of 2001, 2003, and 2010 tax cuts and the phase in of the additional revenues in the ACA (Obamacare).
- Capital Gains and dividend taxes would be eliminated for middle and lower-income taxpayers, and remain at 15 percent for higher incomes.
- “Higher Income” is defined as above $200,000 per year for married taxpayers and $100,000 for singles. The Romney plan did not specify what he meant by high income taxpayers. $200,000 will cover about the top three percent of earners.
- Tax expenditures to be reduced (“on the table”) would be: Employer-provided health insurance and fringe benefits; exclusion of Social Security benefits, moving expenses, employee expenses, educational deductions and credits, medical expense deduction, state and local tax deduction, mortgage interest, charitable contributions, child and dependent tax credits, Earned income tax credit, child credit, various others.
- Tax expenditures “off the table” would include those listed above, and the step-up basis for assets in an estate.
Based on these assumptions, the net revenue reduction from the rate reduction would be $360 billion in 2015. Even eliminating all of the “on the table” expenditures from higher income taxpayers would leave a revenue shortfall of about $86 billion. To remain revenue neutral this shortfall would have to be pushed down to middle and lower income taxpayers.
The TPC concludes that the change in after tax income would be:
|
Income Percentile |
Percent change in after tax income |
| 0–95 |
–1.1 |
| 96–99 |
+1.8 |
| 99 –99.9 |
+3.5 |
| 99.9–100 |
+4.4 |
Or in terms of income level
|
Cash Income Level |
Percent change in after tax income |
| 0-$200K |
–1.2 |
| $200K-$500K |
+0.8 |
| $500K-$1,000K |
+3.2 |
| >$1,000K |
+4.1 |
In other words, the top five percent would pay lower taxes than today, and the bottom 95 percent would get a tax increase. The situation is even worse for households with children, because a lot of tax expenditures favor them.
TPC briefly considered how the “growth” effects of tax rate reductions would mitigate this situation. Their basic opinion is quoted from Alex Brill of the American Enterprise Institute (yes, the AEI, not exactly a den of liberal thinking) “lowering statutory tax rates while broadening the income base generally does not reduce work disincentives because it leaves the relevant effective tax rates unchanged”. Just what I would have said. But they did pass the changes through a model developed by Gregory Mankiw (now on the Romney economics team), a model which is quite generous in its growth assumptions. Even with these growth changes, there would still be at least a $33 billion shift in tax revenue from higher to lower income taxpayers.
A few observations:
- The study doesn’t show that a 20 percent across-the-board tax rate reduction could not be revenue neutral. It DOES show that it would inevitably increase the after tax income on higher-income taxpayers, and the higher the income the bigger percentage of income gain.
- Most important, this study considered changes in tax expenditures which are politically impossible, to show that even in that case revenue neutrality without higher taxes on middle and lower income taxpayers is mathematically impossible. For example, there could not possibly be a sudden cutoff of all deductions at $200K because the marginal tax rate at $199,999 would be astronomical, hundreds of thousands of percent. Look at the list of “on the table” items and imagine trying to eliminate them all, even for a small (but powerful and rich) minority of the population. Like I said, politically impossible.
- Thus the elimination would have to be phased in over income levels, which would push still more taxes into the middle and lower income ranges.
- This proposal eliminates the Estate Tax. I’ve said it before and probably will again. The estate tax affects only two to three tenths of a percent of each year’s decedents, and only very wealthy ones.
- Under any scheme for base-broadening, very high incomes have a much bigger percentage boost in their after-tax income than those farther down the scale, and at some point down the scale the effect is negative. Romney again seems to be serving the interests of his real constituency.
- In these studies the debate has been around the distributional effects of the proposed tax cuts. Since the budget is still far out of balance, and these proposals only at most get to revenue neutrality, it doesn’t help the deficit at all.
In my next article I’ll look at the counter and countercounter arguments this analysis generated, including Martin Feldstein, Harvey Rosen, and others. Stay tuned.
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Excellent job PWS. Actually pretty fair too.Although, I’d rather it get compared to the Obama plan (whatever that is) vs. whatever Feldstein
and Rosen put together.
I am confused as to the result. The 1 year cost appear to be $360B. Yet Wiki says we collect about $900B in income tax. So a simple slashing of that by 20% would appear to cost $180B, and thats before deductions are capped. Not sure where the other $180B comes from.
As for the “politically impossible” deductions, I think you’re overdoing it. I don’t see anything as daunting as even alot that was in Obamacare and most people won’t care that rich people only get a limited amount to help them buy a house.
In a WSJ article last week, a group of 80 CEO’s, who run companies that actually make things and who are dependent on customers for success, have come out and said that it will be a necessity that taxes be increased to reduce the debt. This is a complete rejection of the “Romney Plan”, which calls for no tax increases.
I believe I’ll take to consensus opinion of 80 CEO’s versus that of 1 CEO, when it comes to practical financial advice.
http://online.wsj.com/article/SB10001424052970203937004578076253372633058.html
But Max, they didn’t sign the Grover Norquist pledge, did they?
PWS… I’m not at all qualified to comment on the content of your article, but for various reasons I am quite qualified to comment on the style, which is truly impressive.
I admire the coherence and lucidity with which you express yourself, right down to technical details like varied, punchy sentence structure and excellent word choice. It’s such a clear style that even I can almost understand what you’re saying, although this stuff is usually quite opaque to my right-brain thought patterns.
You were obviously born to be a writer.… and that’s a pretty rare gift. Well done.
I echo filistro’s comments. Really well done. Great article.
This illustrates well why Romney’s performance at the first debate was so shocking. He simply lied about his tax proposals, and then continued to lie, and stonewalled any attempt to call him on the lies.
President Obama did much better in the second and third debates in pointing out where Romney’s current lies hide the truth behind what little he has given in the way of numbers. Biden did it excellently with Ryan. Former President Clinton has been nothing short of brilliant on this both in his presentation at the Democratic convention, and since then on the campaign trail.
Bottom line — Romney’s proposals are impossible, unless we are to balloon the deficit or have skyrocketing taxes on the middle class. And that’s the truth.
I wonder if Romney is a Tigers fan? How about them Giants.
Great information packed article. On the face of it, it seems so transparent to anyone who can add. It raises the serious question, how does such a blatantly counter factual argument as Romney’s get traction. IMO, the failure to effectively critique this farce may have been the greatest failure of Obama’s campaign.
I wonder if Romney is a Tigers fan? How about them Giants.
Probably so. He was born in Detroit.
@PWS
Thanks for this excellent article outlining what TPC found to be the “mathematically impossible” aspects of Romney’s plan. The impossibility of the numbers seemed pretty obvious to me based on my own previous attempts to contrive an “ideal” tax plan, but your article really lays it out in a concise and clear manner how and who would be impacted by Romney’s plan, considering the little details he’s given. The impact of a 20% across-the-board cut is even more regressive than I’d thought. I didn’t expect that the decrease in post-tax income would hold all the way up to the 95th percentile while the 96th percentile would see an increase. The Romney plan really is giving more money to the top 5% (instead of 1%) at the expense of the other 95% of us.
rgb re #1
TPC starts with 2015, which is the first year they think the Romney plan would have any effect. Their estimate of individual income tax collection is 1,617 billion, so 20% is 323 billion, and you have to add the lost estate tax collections.
I like the idea of comparing this to the current and future administrations’ plan, but it will take quite a bit of work. I’ll work on it after I post the second part of this.
I think these changes would in fact be politically impossible, for a lot of reasons. I’ll go more into that later.
I’d just like to say that Paul Ryan looks like a maniac in the picture that accompanies this article. He also looks like he’s in high school.
rgbact,
I wonder if you can put that much faith in his birth certificate?
Filistro and DC. Thanks very much for the kind words, they’re much appreciated
Interesting article relating cell phones, polling, and the bifurcation of registered voters and likely voters in polls.
http://www.motherjones.com/mojo/2012/10/polls-cell-phone-obama-voters-undercount
Thanks PWS. Those revenue estimates are likely way overly optimistic. But doesn’t matter.
Anyway, looks like they assume a 8.2% overall cut in revenue and then 6.2% is given right back with deduction cuts leaving a 2.0% hole. And that doesn’t even account for any added economic growth or spending cuts. And since Romney already stated he will ensure the rich don’t get a net tax cut, your Observation #1 should be taken care of. So.….I think Romney’s plan is very doable.
@rgb
“And since Romney already stated he will ensure the rich don’t get a net tax cut, your Observation #1 should be taken care of”
HOW? I can state the moon is made of blue cheese, it doesn’t make it so.
Speaking of winners and losers. Remarkable that the team that swept the (admittedly emasculated) Yankees was in turn swept by the Giants.
cc,
It’s easy for those who are predisposed to want to believe.
Only remotely related — and this should go in a new thread — but what’s happening on the East Coast should raise questions in our minds about Romney’s desire to privatize FEMA during the campaign.
It is related to this thread in that FEMA is one of the agencies Romney wanted to do away with in order to pay for his tax cuts. Ryan wanted to gut disaster funding in his budgets.
DC,
Indeed it should. And I believe it is very important for this topic to be discussed on the campaign trail. In many respects, it’s a shame that this didn’t happen before the second debate. It would have been an interesting discussion.
That said, I suspect Romney would have said something to the effect of “I never said we should get rid of FEMA, just that it would be more efficient if it were run by a private company.” (and then the unspoken part: “…funded by Bain Capital.”)
And so it goes.
@DC
This morning, MSNBC aired the clip of Romney from the primary debates saying he wanted to do away with federal disaster relief and leave it all up to the states…
CNN has been Hurricane Sandy Central all day. The scenes of the storm surge and winds are truly awe-inspiring, in a terrifying sort of way. I hope everyone in the states impacted listened to their mayors and governors and to President Obama when they all urged them to get out of the storm’s way. I can only imagine how much destruction there’ll be with a storm this large and slow-moving barraging one of the most populated parts of our country.
Any readers here in NJ, NY, MD, CT, MA, DE, ME, PA, etc. be safe!!!
I understand that serious effects of the storm are being felt as far away as Chicago, especially 20 ft waves from southeast Lake Michigan. Seriously, folks, I hope everyone is OK.
Michael,
I would have hoped the 4th estate would have engaged in more than a score keeping, poll watching manner to ferret out the facts.
Romney’s current position on Privatizing FEMA. I think “States” in a Romney pronouncement is becoming a metaphor.
http://tv.msnbc.com/2012/10/29/romney-may-regret-privatize-fema-remarks-in-face-of-sandy-destruction/
I think it’s meaningful that Jim Cantore (Weather Channel), a noted global warming skeptic, gave something of a dissertation for him on how global warming was creating the weather pattern leading to the odd storm track of Sandy as well as the odd summer heat pattern of the last few years. He was violently opposed to the notion that global warming was effecting storm severity just a few years ago.
Scott Brown ducks a punch.
http://www.politico.com/news/stories/1012/83026.html?hp=f1
Apparently Nate Silver has stepped on Romney’s enthusiasm storyline, and they’re really unhappy he won’t drink the Kool Aid.
http://www.businessinsider.com/politico-nate-silver-piece-article-dylan-byers-model-predictions-obama-romney-2012–10
HOW? I can state the moon is made of blue cheese, it doesn’t make it so.
Its the tax code.…there should be a million tweaks you can make to smooth out the small differences in Table 1. Anyway, I get a kick out of the handwringing over a potential $86B shortfall when Obama’s stimulus was 10 times as large and liberals wished it was larger.
rgbact,
Presumably because you believe all debts are created equal.
cc,
It’s not surprising that few people understand statistics. What’s unfortunate is that so many of them think they understand statistics.
For what it’s worth, I’ll readily admit that I’m a rank amateur compared to many number crunchers. And yet I seem to understand it better than an awful lot of people who claim to understand it. Perhaps it’s a manifestation of the observation that many make, that the more you know about a subject, the more you realize there is to know.
Michael,
here, here. Krugman’s comments sort of echo my thoughts. Silver started in econometrics before baseball, and then political polling. If the doofi would read his book “The Signal and the Noise”, they might come to understand what he’s getting at, and how he has no dog in this fight. My goodness, he was about the only pollster who got the breadth of the 2010 GOP serge in the House right.
I think I understand Romney’s aversion to Big Bird better.
http://www.youtube.com/watch?v=KnD8BYjZiW0&feature=related
rgbact,
Will you list them for us?
By the way — on the topic of whether rigging voting machines is likely to win the election for Romney, it’s clear that Romney doesn’t think so. His campaign has just made some major ad buys in Pennsylvania, and has produced a stunningly dishonest ad for Ohio accusing the President of forcing the auto industry into bankruptcy (wasn’t that Romney’s idea?) and revealing a conspiracy plot to ship all our cars (and the associated jobs) to China.
These are acts of sheer desperation. If Romney thought he had the slimmest hope of winning he wouldn’t be messing around with these freakishly off-the-wall measures.
And, and just to make sure his insane rightist base isn’t going to abandon the new Moderate Mitten the Kitten, his campaign doubled down today on the notion that disaster relief should be up to the states. Romney is still trying to be all things to all people.
@DC
I thought those Tagg-owned machines were only being used in two of Ohio’s counties, which wouldn’t be sufficient to rig the vote even if they were trying to do so (which I honestly doubt).
I have more of a philosophical problem with it being possible for someone to alter votes en mass undetected than any true suspicion that either party will actually try to steal the election this go around. Unlike in-person voter fraud, which requires massive involvement to change individual votes one at a time and is comparatively easy to detect and stop, the machine-tabulated votes are incredibly insecure and easy to change thousands or even millions of votes with a keystroke. That is a significant problem for voter confidence. We need to trust that our votes are secure and counted correctly. We need to know we can trust the results of the election, so this appearance of corruptability needs to be purged. I like the idea of using voting machines, but they need to be secure and trustworthy and idiot-proof, so that “mistakes” by election workers don’t accidentally flip an election.
dc,
We probably shouldn’t be bringing up the notion that there is an enormous voting-machine-rigging conspiracy orchestrated personally by Mitt Romney without harder evidence than voting statistics that give the appearance of being dubious when arranged a certain way in Microsoft Excel. Statistics alone are never going to prove that case.
Last time I checked New York State (at least the part I’m from) uses mechanical voting machines, which would be somewhat more resistant to tampering than computerized systems.
AW,
Just for you, I emphatically deny that I have any evidence whatever that the Republican Party is engaged in massive vote manipulation, regardless of what some say. Like FOX, I just ask the questions in a fair and balanced way.
dc — the election may be stealable, in fact I strongly believe that the election system in the US, specifically the voting machines, are a clear and present risk.
However, I am also sure that Romney would like to win without rigging it. Why? Because rigging it risks exposure. No-one believes the vote in countries where the massive underdog wins, but in a close election, enough people would believe the person won anyway (reference the unusual Ohio results in 2004, might be legit, might not, but not enough interested parties looking into it regardless as it was a plausible win).
Right now I believe there is a good chance Obama will get enough votes to win. Will he be tallied as the winner? That is less likely I think.
DC,
I didn’t know Glenn Beck was trying to make a comeback as a liberal blogger.
dawolf,
Just think about it this way — if people were allowed to vote for “The GOP” in America like they can in Britain they would probably win more elections than they do already. Mr. Generic Republican is quite the savvy operator.
“My goodness, he was about the only pollster who got the breadth of the 2010 GOP serge in the House right.“
1) He’s not a pollster. He’s a polling aggregator and a psephologist. 2) WTF is a “serge”?3) He was predicting a 40–45 R swing early, gravitated to +53 just ahead of the election, well short of the +63 it wound up being. Many other observers “got the breadth” of the “surge” much closer than that. 4) $%^# the Giants!
mclever,
I have the same philosophical problem. But I have the suspicion as well. I know I have been claiming that Florida has more chicanery going on than does Ohio, but the more I research it, the more I think I may be wrong. Jon Husted, Ohio’s Secretary of State, has been working mighty hard to put his thumb on the right side of the voting scale. I’m not sure how much he has done that isn’t public knowledge, but I’m very suspicious. He certainly has the power to move the needle quite a bit (on the order of a couple percent) from the will of Ohio’s voters.
No kidding.
They have never been that way in the history of the United States.
Armchair,
Au contraire. They were notorious for being rigged.
dawolf,
It’s hard to look into something when the evidence has already been destroyed.
@AW
You’re right, but not completely. In the UK system you vote for the local MP, and whoever gets the most MP’s has the opportunity to form a government and pick their own leader.
A poor leader has a heavily negative impact on the number of MP’s you get, making it much less likely you get to be Prime Minister. In the last General Election, Labour lost: but if Gordon Brown hadn’t been in charge, they probably would have won.
Basically, the coattails in the US are also apparent in the UK.
dawolf,
Aha. I was under the impression voting was purely for party in Britain, with no names mentioned. I guess that British voters, not having the opportunity to split their ticket, are somewhat less attached to their local representatives.
most people don’t even know who their local MP is, or really care. There are some exceptions, but unless you are a very good or very bad MP you’ll tend to track vote-wise with your party.
rgbact re: #15.
Sorry lost power and was offline for a day.
You need to clarify this more, because I’m not sure you’re talking about the same thing I am. Where did your 8.2% figure and 6.2% figure come from? Tell me so I don’t have to figure it out. Also, can you clarify what you mean by Romney’s plan seems doable?
yes, Romney asserted that he rich won’t get a net tax cut. And yes, as I’ll discuss in my next post, it’s possible to make sure that the aggregate of all people above a certain (relatively low) income level don’t get a net tax cut. But given a 20% tax rate reduction, the very wealthy (let’s say above $500K cash income) have to get a large tax cut, and the higher their income, the greater that tax cut is likely to be. This is very clearly spelled out by the TPC and was not denied by any of the subsequent discussion. Romney’s assertion to the contrary would be a case of calling spirits out of the vasty deep, except that Romney and his crew know damn well they’re being, let’s say, disingenuous.
Since the very wealthy already pay a federal taxes at the lowest rate in about 80 years (but I’ll check that), and already pay a lower SHARE of federal income taxes compared to their SHARE of income, this seems to me outrageously unfair.
But there’s a lot more to discuss here. Please get back to me with the questions I asked.
rgbact re #26.
As I said, I lost power and was out for a day.
Also as I said, you and I may not be talking about the same thing, considering your comment about the stimulus.
The $86B was the amount of taxes that would could not be raised by tax units above $200K , and so would have to be pushed down to lower income tax units in order to Romney’s tax plan revenue neutral, contrary to Romney’s promise that there would be no tax increase on the ‘middle class’. I think a comment about its size in relation to the stimulus is kind of irrelevant there, but if you want to argue its applicability I’m all ears.
As I’ll mention in my next post yes, there are some additional ‘tweaks’ that could be done, and the upper limit of ‘middle class’ could be lowered to make this doable. But I don’t want to give away the ending, so stay tuned.
But to say it again, under NO circumstances is it possible to have a 20% cut in rates without a very large tax cut for very high earners. As I said, Romney seems most interested in serving the interests of his real constituency.
Where did your 8.2% figure and 6.2% figure come from?
Wiki says 41% of revenue is from income tax. Chop that by 20% and overall revenue is cut 8.2%. You stated the deduction cap still leaves a $86B hole on the $360B tax cut, meaning 76% of the hole is filled. 76% of 8.2% is 6.2%.
can you clarify what you mean by Romney’s plan seems doable?
I’m comparing to Obama’s version of “doable”. Bruce Bartlett estimates Obama’s payroll tax holiday has an annual cost of $100B. Is that doable? I missed the TLC/liberal analysis on that. Obama’s stimulus package (which most liberals thought was too small) cost about $900B or 10 years worth of Romney’s tax changes, and has left us with $5T more in debt. Is that doable? Anyway. a 2% cut in revenue, coupled with some sensible spending cuts and the added economic growth seems doable to me.
and so would have to be pushed down to lower income tax units
I don’t mind. Alot of people pay little or no taxes. Thats sort of the whole purpose of “broadening the base”.
and already pay a lower SHARE of federal income taxes compared to their SHARE of income,
That seems bizarre since we have a progressive tax code. I assume its due to cap gains, which shows that adjusting the income tax won’t change much.
rgbact,
You say: “we have a progressive tax code” — only if you ignore all taxes other than federal income tax. All other taxes are either regressive (sales, property, SS and Medicare) or straight percentage (many state income taxes).
SC–
Good point. Problem is SS and Medicare are capped benefit ie paying more in taxes gets you no more benefit. Welfare programs are difficult to justify progressivity on when benefits are capped. Medicare taxes aren’t capped anyway though. A rich person will get the same Medicare as a poor person and pay far more in taxes (and for their monthly premium). So I guess you need to compare progressivity of benefits too.
rgbact,
Are we talking “benefits”, or are we talking “social quality of life support” (welfare)? If we’re talking about the latter, why should they be progressive?
But you are correct about Medicare tax — the ceiling on income for that was lifted a while ago, so we move that 1.45 percent (as I recall) from regressive to straight percentage. Still not progressive, of course.
rgbact —
So when you say Romney’s plan is “doable”, what you mean is that you’re okay with it adding to the deficit. You don’t mean “doable” in the sense of being “honest” or “achievable” — he claims it would not add to the deficit.
You’re okay with Romney’s plan adding to the deficit. So I don’t want to hear you complaining about the deficit again. Ever. That’s clearly not an honest concern of yours.
Are you aware that this is how insurance policies are supposed to work — that healthy people pay more into the system than they get out? The point of any such program, whether run by a private company or a government, is that that most people who need it can’t afford it.
Are you aware that the whole point of having a nation is that there are things we need but that individuals can’t afford on their own?
Are you claiming that wealthy people do not benefit from there being a healthy populace in the country from which the wealthy people are getting wealthier?
You’re okay with Romney’s plan adding to the deficit. So I don’t want to hear you complaining about the deficit again. Ever.
But I will, since you will too.….yet you rant how we need another massive Keynesian stimulus, which of course will be paid for by the Keynesian stimulus fairy.
I said these calculations don’t account
for any added economic growth and assume spending is no lower than Obama’s. I certainly hope with Romney and a GOP Congress that won’t be
the case.
Are you aware that this is how insurance policies are supposed to work — that healthy people pay more into the system than they get out?
Well lotteries work on the basis that many losers pay for the prizes of few winners. Course few people will play the lottery if they are certain they will be a loser.
rgbact,
I’m not the one who insists that all additions to the deficit are created equal. You have made that pretense — up until now, when you claim that Romney’s additions are okay, even though he promises that he won’t add anything to the deficit. Clearly, your concern isn’t for the deficit. That’s okay — you should merely be honest about what your concerns actually are.
You compare insurance or Medicare to a lottery. That’s fine to do, if your only concern is for yourself, and you don’t give a damn about the nation you live in. The difference between a government program and a lottery is the difference between raising a child and masturbation. One is done for someone else; the other is for your own gratification. I don’t have anything against either one, but they’re done for different purposes.
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rgb re #47
Please let’s not mix all the issues into one gigantic bouillabaise. The Romney tax plan, the TPC analysis and the subsequent ‘six studies’ were specifically about distribution of taxes under a ‘revenue neutral’ system. Since ALL estimates project large deficits, ‘revenue neutrality’ implies the deficit will NOT be reduced by the set of proposals under discussion. If we’re going to have a discussion about deficit reduction, we need to look at proposals which address that issue, and this one isn’t.
As for paying income taxes, a study by the Hamilton Project shows that between ages 35 and 55 70 — 80% of people pay federal income taxes in a given year. Here’s a link http://www.hamiltonproject.org/papers/the_truth_about_taxes_just_about_everyone_pays_them/
Hamilton makes the further point that virtually everybody pays taxes if you include payroll taxes.
I thought I said that the wealthy pay a much lower historical share of income taxes than their historical share of income, meaning that the tax burden on them, despite hysterical screaming, is much lower than it was in say the socialist Eisenhower years, or the equally socialist Reagen years, and that their after tax income as a share of total after tax income is quite a bit higher, and keep rising. .
rgb re #49
That’s not true of Social Security. All taxed income is included in the calculation of benefits (PIA), albeit at a lower percentage the higher the income.