The Man Without a Plan

www.romneytaxplan.com

It hasn't been easy nailing down exactly what Mitt Romney's positions are on a number of issues.  After re-branding himself as a conservative in order to win an unusually extreme Republican primary, he's tried to reverse course to appeal to mainstream voters, while concealing the appearance of flopping around like a fish on the issues (abortion, for example).  The result is that he sometimes plays hide-the-ball when confronted with simple, direct questions about what he would actually do, if elected.  But occasionally the real Mitt Romney shines through, in spite of his best efforts.

One area where the real Mitt Romney can be reasonably guessed at is tax policy and entitlements.  Here's what Romney said about half of America, at an intimate $50,000-per-plate fundraiser which was secretly recorded:

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what … These are people who pay no income tax. Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn't connect. ... [M]y job is is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives.

"Those people" Romney doesn't worry about includes people who work hard but earn modest wages, like the waitresses serving Romney while he was insulting them, or the fitness trainers standing by to help him work off the extra calories the next morning.  The 47 percent includes the elderly, the poor and disabled, students, young people working part time, and soldiers serving overseas.  They aren't all permanent members, either:  one-fifth of them are expected to start paying income tax again as the economy recovers.  These moochers are still subject to payroll, local and sales taxes, of course.  Many of them would earn enough to pay federal income tax, too, if not for the Bush and Obama tax cuts.  (Alas, that's an unfortunate side effect of lowering taxes:  it benefits the mop technicians and the job-creators alike.)  And, awkwardly, Mitt Romney himself paid no income tax last year, instead paying the IRS only 14 percent on capital gains of $21 million.  To make sense of Romney's contradictory statements, you have to add a giant asterisk to them:  tax cuts are good *if they benefit the wealthy.  Paying no income tax is irresponsible *unless you are wealthy.

Romney's response to the leaking of this video was a hasty press conference in which he doubled-down on his comments, admitting only that they were "not elegantly stated".  (Is there an elegant way to say, during a sumptuous banquet, that people are not even entitled to food?  Pass the caviar.)  In case that didn't stick, Romney tried to suggest his comments were taken out of context.  (Not so.  The full video has been released.)  When none of these excuses worked, Romney finally decided that what he meant to say about what he meant to say was that his comments were "completely wrong".

But those "completely wrong" remarks are consistent  with his stated policy positions--more consistent than usual for Romney, at least.  Romney's tax plan consists of a few specific guarantees that will benefit the wealthy; mathematically impossible promises about lowering taxes across the board without increasing the deficit; and vague threats to the middle class and poor about eliminating deductions and "loopholes", and "expanding the tax base".  Which deductions would be on the chopping block?  When asked directly if this includes things like the Earned Income tax credit for people with modest wages, the child tax credit, the home mortgage deduction, or deductions for college tuition and student loans, Romney won't say.  Eliminating such "loopholes" would indeed suffice to "expand the tax base" on those free-riding 47 percenters.

Well, most of the 47 percenters, anyway.  We need that asterisk again, since Mitt Romney would give wealthy 47 percenters like himself historic tax cuts.  This is where Romney's tax plan gets specific.  

He will repeal the estate tax, which would benefit the wealthiest 1 percent of Americans who die each year whose estates, like Romney's, will be subject to this tax (it affects inheritances exceeding $5 million).  Under Obama, the estate tax rate was reduced to an historic low (35 percent; it was 45 percent under Bush, and 55 percent under Clinton), but why pay that when you can pay nothing?  Sure, repealing the estate tax would increase the deficit by $29 billion per year, but that can be offset by cutting public programs the wealthy don't need (like Big Bird).  

The other thing Romney will repeal is the Alternative Minimum Tax (AMT).  The AMT affects 4 percent of taxpayers and is supposed to ensure that wealthy individuals and corporations pay at least some tax.  There goes another $26 billion per year.  Obama's budget will reduce the number of taxpayers affected by the AMT by permanently indexing it for inflation, but that's not enough to benefit ultra-rich guys like Mitt Romney.  

Finally, Romney pledges not to raise taxes on capital gains.  What a relief that will be for so many Americans who, like Romney, made $21 million in capital gains last year while paying less tax than a bus driver as a percentage of income.  By contrast, under Obama the capital gains tax will increase 9 percent (still lower than rates under Reagan) for households with income in the top 2 percent.  Socialism!