Ezra Klein: Tax plan specifics! From Mitt Romney!
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/02/tax-plan-specifics-from-mitt-romney/
Ah, now were getting somewhere. ABC News reports that Mitt Romney told Denvers Fox affiliate that one option he was considering to pay for his tax plan was to give everyone up to $17,000 in deductions, but no more than that. You could use your charitable deduction, your home mortgage deduction, or others your health-care deduction, Romney said. And you can fill that bucket, if you will, that $17,000 bucket that way. And higher income people might have a lower number.
This leaves a lot of unanswered questions. For instance, which deductions are covered in the $17,000 cap? Is it only the deductions he mentioned? Is it all itemized deductions? Is the state and local tax deduction in there? Is it really going to include the exclusion for employer-based health care? Is the cap in addition to, or instead of, the standard deduction? Do individual taxpayers have a lower cap than families?
Even if you assume the plan will be maximally stringent, it doesnt look like this would raise enough money to pay for Romneys tax cuts. Remember that to make the numbers work, Romney would have to fully eliminate all itemized deductions and a few deductions beyond that for wealthy taxpayers. This doesnt go anywhere near that far. William Gale, of the Tax Policy Center, says the net revenue would likely be in the $1-$2 trillion range, while Romneys rate cuts are in the $5 trillion range, though he cautions that thats just a guess based on Romneys description of the idea.
Its also very difficult to see how Romney achieves his goal to keep the plan distributionally neutral using this policy. Remember that when the Tax Policy Center looked at Romneys rate cuts, they went top-down, meaning they eliminated every dollar of deductions for people making more than $200,000 before eliminating any dollar of deductions for people making less than $200,000 and they still couldnt make the policy as progressive as the current system. This idea, while it hits the rich harder than it hits the poor, is not nearly so progressive, which means it does imply a net tax increase on those making less than $200,000 and a net tax cut on those making more than $200,000.
-snip-
"The question now," Klein writes, "is whether we get more details from the Romney campaign, or whether theyre just trying to throw something out there so they have something vaguely plausible sounding to say when pressed for tax specifics during the first presidential debate."
My own guess is that this is just a last-minute, desperate attempt by the Romney campaign to avoid the charge that they have no tax specifics.
I've already posted in LBN about Romney floating this idea
http://www.democraticunderground.com/1014253624
but I wanted to post Klein's response separately.