Mitt Romney’s Tax Plan: Very Progressive By 15th Century Standards
The Tax Policy Center has completed an analysis of the distributional effects of Mitt Romney’s tax plan, and as might be expected it’s quite good for you if you’re raking in the big bucks, and not particularly helpful if you’re not. For the bottom 80% of the income distribution, federal tax rates would drop between 0.6% and 3.4%. For the top 20%, they’d drop 5.9%; for the top 1%, they’d drop 8.6%. That means the regular-joe taxpayer at the middle of the distribution gets a cut of about $1,400, while a taxpayer in the top 1% gets a cut of $171,000. Kevin Drum cracks wise:
[C]onservatives are right to believe that Romney isn’t to be trusted. Sure, he lowers tax rates on millionaires by 9 percentage points, and you may think that’s a pretty sweet deal for the rich. But come on. Newt Gingrich would lower them by 24 percentage points. (No, that’s not a typo.) Rick Perry lowers them by 20 percentage points. Herman Cain lowers them by 15 points. Frankly, Romney is hardly even trying here.
Along similar lines, and because I’ve been reading about this stuff lately, I’d like to point out that in the long historical context the tax rates Mr Romney is proposing are still extremely progressive. In fact, up until at least the 15th century or so, tax rates in the Western world were generally higher for poor people than they were for rich people. In early Renaissance Florence, as Tim Parks explains in his highly readable “Medici Money“, almost all state revenues were raised from excise taxes on consumption, while the holdings of the wealthy were exempt from almost any form of routine taxation. This state of affairs persisted until 1427, when the cost of hiring mercenaries to protect the city from the Duke of Milan, the French, and basically everyone else in the free-for-all of Italian politics rose so high that they had to introduce a universal tax called the catasto. This exempted about a third of the poorest households, while everyone over a certain level of income had to pay a flat tax of 0.5% on their wealth—a wildly progressive move in its day.
Meanwhile in Flanders, as John Munro writes in “The Usury Doctrine and Urban Public Finances in Late-Medieval Flanders (1220-1550): Rentes (Annuities), Excise Taxes, and Income Transfers from the Poor to the Rich“, state finance came to rely increasingly on issuing annuities paying an annual income. This was because the Catholic church’s rulings on usury made it increasingly difficult for sovereigns to borrow at interest. The Pope said it was okay to issue the annuities as long as the taxes used to pay them came from the produce of the land, safely removing them from the unnatural auto-reproduction of money implied in usury. That meant, again, that taxation mainly consisted of excise taxes on consumption, and “the obvious significance of this form of public-finance related taxation was that it was essentially very regressive, in representing a far greater burden on the poor than on the middle classes, let alone the rich.” Since most people who could buy and hold state annuities were rich, it was a pretty direct transfer of wealth from the poor to rentiers.
So, again, while it’s true that Mr Romney’s tax plans represent a large net transfer from the poor to the rich if you start from the baseline of current tax law, they’re actually pretty progressive if you’re willing to start from a pre-modern baseline.
By: Democracy in America, published in The Economist, January 6, 2012
Mitt Romney Has A Big Tax Problem
Mitt Romney has been insisting for a while that he will not cut taxes for the rich, which everybody took to mean that he would lock into place the enormous, expiring Bush-era tax cuts for the rich, but cut taxes no deeper than that. He has said so over and over again. Here he is saying, “If I’m going to use precious dollars to reduce taxes, I want to focus on where the people are hurting the most, and that’s the middle class. I’m not worried about rich people.” And here’s Romney insisting, “I’m proposing no tax cuts for the rich.”
Today the Tax Policy Center analyzes his plan, and it turns out that Romney would, in fact, cut taxes for the rich, even below current levels. The highest-earning one percent would get an additional tax cut averaging $82,000 a year. Romney’s plan would also raise taxes on the lowest quintile by an average of $157 a year.
That the leading Republican wants to cut taxes for the rich is not exactly man-bites-dog. But it is a huge political liability for him. Raising taxes on low-income earners is unpopular, cutting taxes for the rich is unpopular, and doing it when you’re a wealthy scion who looks like a wealthy scion is extremely unpopular. That’s why Romney has been furiously insisting he won’t cut taxes for the rich.
Ross Douthat, taking Romney’s claims at face value (like many of us did), confidently asserted yesterday that he has avoided exposing himself to the charge of cutting taxes for the rich. Romney, he wrote, is “campaigning instead on a revenue-neutral tax reform and a modest tax cut for middle class investors, neither of which leaves him particularly vulnerable to the charge of “giving massive tax breaks to the rich.”
Turns out he’s not. And his plan isn’t revenue-neutral, either. It would add $180 billion to the deficit in 2015.
What makes this report tougher for Romney is the timing. He’s already under pressure from conservatives upset with his pledge not to cut taxes for the rich. If he had already wrapped up the nomination, Romney could just say, “oops, we screwed up the plan,” and release a new one that holds taxes for the rich at their Bush-era levels and doesn’t raise them on the working class. But that would be a tricky move in the midst of a primary. Anyway, the changes he’d have to make would be very large — $180 billion a year is big money, requiring a major revamp of his plan.
By: Jonathan Chait, Daily Intel, January 5, 2012
Mitt Romney Contradicts Own Spokesman On 100k Jobs Claim
Mitt Romney doubled down in Saturday night’s debate on his claim that he created a 100,000 jobs while in the private sector and in the process contradicted recent remarks on the subject from his own campaign spokesperson.
Under persistent questioning from debate moderators, Romney denied that the 100,000 figure can only be reached if one does not count layoffs and other job losses he was responsible for during his time at the corporate management company, Bain Capital.
The talking point, a regular on the campaign trail for Romney, has been well-dissected in recent days. As Brian Beutler wrote last week,
Romney makes two different, but implicitly entwined claims: That while working in corporate management he created over 100,000 jobs and that — by comparison — Obama his presided over millions of job losses.This is a false juxtaposition, based on two false claims. And so far, precious few reporters have pressed Romney or his campaign about it.
That changed big time Saturday when debate moderator George Stephanopolous asked Romney to justify the claim early in the debate. Here’s the question:
There have been questions about that caluclation of the 100,000 jobs, so if you could explain a little more, I’ve read some analysts who look at it and say that you’re counting the jobs that were created, but not the jobs that were taken away. Is that accurate?
Here’s where things get a little complicated. Last week, Romney advisor Eric Ferhnstrom told the Washington Post Romney’s claim that he created 100,000 jobs “stems from the growth in jobs from three companies that Romney helped to start or grow while at Bain Capital: Staples (a gain of 89,000 jobs), The Sports Authority (15,000 jobs), and Domino’s (7,900 jobs).”
“This tally obviously does not include job losses from other companies with which Bain Capital was involved — and are based on current employment figures, not the period when Romney worked at Bain,” the Post wrote.
On the debate stage tonight, Romney said something totally different:
It includes the net of both. I’m a good enough numbers guy to make sure I got both sides of that. The simple ones, some of the biggest, for instance, there’s a steel company called Steel Dynamics in Indiana. Thousands of jobs there. Bright Horizons Childrens Centers, Sports Authority, about 15,000 jobs there. Staples alone, 90,000 employees. That’s a business we helped start from the ground up.
So Romney’s adviser told the Post the the number comes from the jobs that exist at the companies now, not the jobs that were created specifically while he was at Bain, and that they didn’t take into account the other side of the ledger. But on stage Romney said the opposite: that he actually did create 100,000 net jobs in total while at Bain, even factoring in Bain’s layoffs.
Democrats noticed the difference. While the debate was still underway, the DNC pushed out a release to reporters under the subject line, “Romney’s so-called job creation record at Bain continues to evolve.” Separately, the Associated Press went up with a fact-check article moments after the debate concluded.
So this one is going to stick around.
Update: TPM asked Romney spokesman Eric Fehrnstrom about the seeming contradiction between his and Romney’s assessment of the 100k jobs figure. He said that it holds up regardless of whether it includes layoffs at other companies.
“The Bain record has been scrutinized extensively going back to 1994 when Mitt Romney first ran for office,” he said. “You just look at Bain’s startups like Staples, Sports Authority, Bright Horizons, you come up with a jobs figure in excess of 100,000. Now there’s about five or six companies that get written about endlessly that experienced layoffs. Go ahead and deduct those from the number, you still come up with over 100,000 jobs.”
Asked whether the campaign would provide revised numbers that demonstrate that net job gains were in excess of 100,000 even with layoffs included, Fehrnstrom responded, “I just gave you my analysis.”
By: Benjy Sarlin and Evan McMorris-Santoro, Talking Points Memo, January 7, 2012
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 