Math is pretty important these days. If you’ve been watching the presidential debates, you’ve probably felt like the candidates should use a chalkboard to explain their disagreement on taxes. The numbers have been flying, and many Americans are confused.
I’m here to help. This is a tutorial on the many tax plans of Mitt Romney.
Don’t be scared. As Bill Clinton said, it’s just arithmetic.
Earlier this year, Romney announced his first tax plan. His big idea was to reduce individual income tax rates by 20 percent in addition to extending all the Bush tax cuts permanently.
So, instead of paying 10 percent, the bottom tax bracket would pay 8 percent. Instead of paying 15 percent, the next tax bracket would pay 12 percent. And so on.
But 20 percent of 35 is a lot bigger than 20 percent of 10, so high-income taxpayers would get a much bigger tax cut.
Romney also proposed cutting the corporate income tax, eliminating the estate tax, and eliminating the tax on investment income for folks earning less than $200,000.
Under this plan, the top 0.1 percent of households would get an average tax cut of $725,716, while the middle class would get $810 apiece.
So Mitt Romney came up with a new plan. After he cut taxes by $456 billion, he’d raise them by $456 billion.
If that sounds like a waste of time, you’re not thinking like a politician. This way, he could campaign on a huge tax cut and, at the same time, vow to reduce the budget deficit. He just wouldn’t tell people he won’t actually be cutting their taxes. Because he can’t. Not unless he wants to increase the budget deficit.
Here’s how he’d do it. After he lowered everyone’s tax rates, he’d eliminate enough deductions and tax credits to make up for all that lost tax revenue.
So, you can say goodbye to the child tax credit, the education tax credit, the charitable-donation deduction, the mortgage-interest deduction, etc, etc. I’m just making this up because Romney never specified which deductions and credits he’d eliminate. And that’s kind of important, right? He’s proposing a radical restructuring of the tax code that could have a huge effect on you, and he refuses — again and again and again — to give any details. But suffice it to say, if you benefit from any of those deductions or credits, you should be worried.
Now he’s got a new problem. For high-income households, there aren’t enough deductions and credits to make up for the massive tax cuts they’d enjoy under Romney’s plan. Even if he got rid of all those deductions and credits, they’d still get a tax cut.
If this plan isn’t going to increase the deficit and high-income households are getting a tax cut, then everyone else is getting a tax increase. In this scenario, the middle class would pay an average of $899 more in taxes, while the top 0.1 percent of households would pay $246,652 less.
So Mitt Romney came up with a new plan. Again.
Since high-income households are more likely to use more than $25,000 in itemized deductions, this plan would hit them harder. So Romney can say he’s taken the burden off the middle class.
But wait. Yep, you guessed it: There’s a problem. Again.
This plan would only raise $103 billion in 2015. If Romney keeps his promise to cut tax rates, he’d be increasing the budget deficit by $353 billion.
No matter how hard he tries, Mitt Romney can’t avoid arithmetic: Cutting taxes increases the budget deficit.
That’s why the last three Republican presidents each presided over massive increases in federal debt. That’s why Dick Cheney said, “Deficits don’t matter.” And that’s why Mitt Romney’s numbers don’t add up.
But don’t worry. I’m sure he’ll change his mind again.
This op-ed was published in today’s South Florida Sun-Sentinel.