Sunday, March 4, 2012

What is Romney's real tax policy?

It's difficult to nail down Romney's new tax plan that includes 20% across the board tax rate cuts. Is he proposing to offset these cuts with changes to the deductions or not? Romney or his economic adviser have said at various times, like here, that there will be changes to deductions making the cuts revenue-neutral.

Romney himself isn't clear whether he supports the 20% tax rate reduction by itself without the changes in deductions. In this op-ed from March 1, he fails to mention deductions or whether the cuts will be revenue-neutral. He's also embraced "dynamic scoring" which uses the assumption that tax cuts will lead to permanent economic growth and permanent higher revenue... just like the Bush tax cuts. It isn't clear whether he's bought into the faith that "tax cuts will pay for themselves" or whether he wants to cut rates more than dollar-for-dollar offsets will allow.

His lack of clarity may gain him votes from the trickle-down faithful. Maybe he's planning a bait-and-switch after the primaries so he'll look more fiscally responsible for the general election. Or maybe no one will pin him down and he won't decide what his tax plan really is until he's president. Of course there's a tradition of presidents not showing their true colors until they're elected, but I was hoping this campaign would be different. Tough luck on that, I guess.

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