The Romney Plan: Winners and Losers

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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:

  1. Cut indi­vid­ual rates in all brack­ets by 20 percent
  2. Elim­i­nate the estate tax
  3. Elim­i­nate the alter­na­tive min­i­mum tax
  4. Elim­i­nate addi­tional taxes on high income tax­pay­ers caused by the Afford­able Care Act (ACA, or Obamacare)
  5. 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:

  1. 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.
  2. 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?),
  3. 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.
  4. 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).
  5. Cap­i­tal Gains and div­i­dend taxes would be elim­i­nated for mid­dle and lower-​​income tax­pay­ers, and remain at 15 per­cent for higher incomes.
  6. “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.
  7. 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.
  8. 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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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  1. 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.

  2.  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/​a​r​t​i​c​l​e​/​S​B​1​0​0​0​1​4​2​4​0​5​2​9​7​0​2​0​3​9​3​7​0​0​4​5​7​8​0​7​6​2​5​3​3​7​2​6​3​3​0​5​8​.​h​tml 

  4. 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.

  5. 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.

  7. 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.

  8. I won­der if Rom­ney is a Tigers fan?  How about them Giants.

    Prob­a­bly so. He was born in Detroit.

  9. @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.

  10. 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.

  11. 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.

  15. 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.

  16. @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.

  17. I won­der if Rom­ney is a Tigers fan? How about them Giants.

    Speak­ing of win­ners and losers. Remark­able that the team that swept the (admit­tedly emas­cu­lated) Yan­kees was in turn swept by the Giants.

  18. cc,

    It raises the seri­ous ques­tion, how does such a bla­tantly counter fac­tual argu­ment as Romney’s get traction.

    It’s easy for those who are pre­dis­posed to want to believe.

  19. 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.

  20. DC,

    what’s hap­pen­ing on the East Coast should raise ques­tions in our minds about Romney’s desire to pri­va­tize FEMA dur­ing the campaign.

    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.

  21. @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.

  22. 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/​2​0​1​2​/​1​0​/​2​9​/​r​o​m​n​e​y​-​m​a​y​-​r​e​g​r​e​t​-​p​r​i​v​a​t​i​z​e​-​f​e​m​a​-​r​e​m​a​r​k​s​-​i​n​-​f​a​c​e​-​o​f​-​s​a​n​d​y​-​d​e​s​t​r​u​c​t​i​on/

  23. 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.

  26. 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.

  27. rgbact,

    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.

    Pre­sum­ably because you believe all debts are cre­ated equal.

  28. 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.

  29. 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.

  31. rgbact,

    Its the tax code.…there should be a mil­lion tweaks you can make to smooth out the small dif­fer­ences in Table 1.

    Will you list them for us?

  32. 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.

  33. @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.

  34. 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.

  35. 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.

  36. 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.

  37. 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. ;)

  38. “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! 

  39. mclever,

    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.

    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.

    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.

    No kid­ding.

    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.

    They have never been that way in the his­tory of the United States.

  40. Arm­chair,

    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.

    Au con­traire. They were noto­ri­ous for being rigged.

  41. dawolf,

    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

    It’s hard to look into some­thing when the evi­dence has already been destroyed.

  42. @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.

  43. 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.

  44. 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.

  45. 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.
        

  46. 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. 

  47. 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.

  48. 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).

  49. 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.

  50. 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.

  51. 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.

  52. A rich per­son will get the same Medicare as a poor per­son and pay far more in taxes (and for their monthly premium).

    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?

  53. 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.

  54. 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.

  55. Pingback: Logarchism » Trick or Treat: Does Romney’s Tax Plan Add Up?

  56. 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​.hamil​ton​pro​ject​.org/​p​a​p​e​r​s​/​t​h​e​_​t​r​u​t​h​_​a​b​o​u​t​_​t​a​x​e​s​_​j​u​s​t​_​a​b​o​u​t​_​e​v​e​r​y​o​n​e​_​p​a​y​s​_​t​h​em/
    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. . 

     

  57. 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.