For months, analysts have been trying to figure out the math backing up Governor Mitt Romney’s tax plan. He claims that his plan to cut taxes for people earning over $200,000 a year ($5 trillion over 10 years) will be revenue neutral. He claims his plan will be balanced by eliminating some itemized deductions that he cannot, or will not, identify. He has basically said to the American people, ‘Trust me, I’m a successful business man—I know what I’m doing.’
The problem is this pesky thing called math. All of Romney’s tax promises just don’t add up without resorting to tax increases on households with income below $200,000.
We heard a lot about this during last weeks presidential debate. Now the folks who wrote the non-partisan analysis, which caused Governor Romney to squirm like a worm on a fishing hook, are responding to Romney’s refusal to admit what his plan does.
William Gale of the Urban-Brookings Tax Policy Center wrote on Monday:
In a recent paper I wrote with two colleagues, we showed that a revenue-neutral plan that met five specific goals that Governor Romney had put forth (reducing income tax rates by 20 percent, repealing the estate tax, the alternative minimum tax, and capital income taxes for middle class households, and enhancing saving and investment) would cut taxes for households with income above $200,000, and—as a result of revenue-neutrality—would therefore necessarily have to raise taxes on taxpayers below $200,000.
This was true even when we bent over backwards to make the plan as favorable to Romney as possible. We considered an unrealistically progressive way of financing the specified tax reductions. We accounted for revenue feedback coming from potential economic growth estimates as estimated by Romney advisor Greg Mankiw. We even ignored the need to finance about a trillion dollars in Romney’s proposed corporate cuts.
Our conclusion was not a prediction about Governor Romney would do as President, it was an arithmetic calculation: all of the promises couldn’t be met simultaneously without resorting to tax increases on households with income below $200,000.
Mr. Gale suggested in his piece that we step out of the hyper-charged world of tax policy and look at Romney’s proposals using the perspective of a math problem one would face in a math class room (assuming of course that there would still be math teachers after Romney’s proposed cuts to education funding).
Suppose Governor Romney said that he wants to drive a car from Boston to Los Angeles in 15 hours. And suppose some analysts employed tools of arithmetic to conclude that “If Governor Romney wants to drive from Boston to LA in 15 hours, it is mathematically impossible to avoid speeding.” After all, the drive from LA to Boston is about 3,000 miles, so to take only 15 hours would require an average of 200 miles per hour. Certainly other road trips are possible — but the particular one proposed here is not.
Most obviously, despite all of the hoopla and name-calling, no one has proved or really even tried to prove that the analysts’ original calculation was wrong—the proposed trip would require speeding, and Romney’s original tax proposals would require tax increases on households below $200,000. involves speeding.
On Wednesday evening we will get to hear from Romney’s running mate Paul Ryan, the author of the GOP budget plan that Romney is running on. We can hope that Ryan will provide more clarity and specifics to the plan when he debates Vice President Biden. But thus far, Ryan has evaded every attempt to pin him down on the math.
But one detail remains constant, as William Gale concluded in his piece, “You still can’t drive cross country in 15 hours without speeding.”