David R. Henderson  

Goolsbee on Romney's Tax and Budget Plans

The Autobiography of Malcol... Hardline Libertarians?...
Hard to know, then, if the wider public noticed the spat over a nonpartisan budget think tank's finding that for Mitt Romney's tax plan to avoid increasing the deficit, it would need to raise taxes significantly on the middle class. Researchers for the Tax Policy Center, a project of Brookings and the Urban Institute, found that Romney's plan would cut taxes for individuals by about $4 trillion over the next 10 years, on top of the costs of extending the Bush tax cuts, by cutting rates by 20%, abolishing the estate tax, and abolishing the Alternative Minimum Tax, among other things.
This is from Austan Goolsbee, "Mitt Romney's Tax Plan and the Middle Class," Wall Street Journal, August 21, 2012. I promised Wednesday that I would highlight good articles from that day's publication. This is one of them.

Another excerpt:

Add in Mr. Romney's promises to raise defense spending by more than $2 trillion, to cap total spending at 20% of gross domestic product, and to amend the Constitution to require a balanced budget--and there is no way to even remotely do that without crushing Social Security and Medicare.

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CATEGORIES: Fiscal Policy , Taxation

COMMENTS (6 to date)
Ziad Abdelnour writes:

Traditionally, we are taught to judge the success of a society by how it deals with the least able, most vulnerable members of that society. Shouldn’t we judge a society by how they treat the most successful? Do we vilify, tax expropriate and condemn those who have succeeded, or do we celebrate economic success as the engine that propels our society toward greater collective well-being?

Ziad Abdelnour

Hana writes:

[Comment removed for rudeness. Awaiting potential edit. Email the webmaster@econlib.org. --Econlib Ed.]

@Ziad Abdelnour
This is off-topic to the post, but I'm not understanding your comment--the most successful in America live lives of unspeakable luxury, their every whim catered to. Check out the Lifestyle section of Forbes magazine for examples. To me, that sounds to me as if society treats them pretty well. What more are you wanting here?

Thomas writes:

Goolsbee misstates the TPC study's findings. The study assumed that revenue neutrality was the goal (and used an absurd current policy baseline to measure that, but that's another story), and said that tax increases on, among others, the middle class would be necessary to reach that goal. If the revenue neutrality goal were disregarded, then the options are cutting spending or increasing the deficit. It's fitting that Goolsbee completely ignores the possibility of cutting spending. It demonstrates how comprehensive the worldview of those working in the Obama administration is, and how it blinds them to obvious choices.

Charlie writes:


1. Romney is the one that said it would be revenue neutral. That's not something the TPC made up.

2. For the prospects of spending cuts, see the second block quote.

Thomas writes:


1. As far as I can tell, Romney hasn't said that the plan is revenue neutral, though some associated with his campaign have suggested that. In any case, one would need to choose the proper baseline for judging neutrality, and a baseline that assumes that we should compare it to current policy plus the revenue streams from the ACA tax increases strikes me as absurd.

2. The point is about the TPC study, which describes an alternative to tax increases. Somehow Goolsbee missed that part of the analysis. The prospect of higher defense spending isn't something I'm in favor of, but it also isn't something promised by Romney (it's described as a long-term goal), isn't something that would prevent spending cuts considered more broadly, and isn't something we should expect to see.

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