Why isn’t Team Romney naming specific tax loopholes they would close? According to Ryan himself, they aren’t naming any because it’s up to Congress to figure out it, but what he really means to say is that he isn’t naming any because what they plan to do is transfer even more wealth to the top.
David Brody: There are some conservatives that have spoken out saying they want to see some more specifics from the Romney/Ryan team and one thing that comes up, at least from the liberals is tax loopholes. Is there a reason you guys aren’t naming specific tax loopholes?
Paul Ryan: Yes because we want to get it done. Look, I’ve been on the Ways and Means Committee for 12 years. I’m very familiar with how to make successful tax reforms take place. Ronald Reagan and Tip O’Neil did it in 1986 but we haven’t done it since 1986 for lots of reasons, which is we don’t want to presume to say, ‘Here’s exactly our way or the highway take it or leave it Congress.’ We want to say this is our vision, lower tax rates across the board for families and small businesses and work on the loopholes that are enjoyed by the higher income earners, take away their tax shelters so more of their income is subject to taxation.
That lowers everybody’s tax rates. And we have to be able to work with Congress on those details, on how to fill it in and, more to the point, we don’t want to cut some backroom deal that they did with Obamacare where we hatched some plan behind the scenes and they spring it on the country.
Paul Ryan knows how to pass successful tax reforms even though he hasn’t done so before. Just trust him. And isn’t “my way or the highway” the way Congress has behaved since January, 2011? But I digress.
Ryan referenced the Tax Reform Act of 1986 which did close some loopholes and result in higher tax bills for those who were previously exempt, but this was accompanied by 10 other tax increases during Ronald Reagan’s two terms that were required to offset a massive give-away to the rich. Between 1981 and 1986 the top income tax rate was cut from 70 percent to 28 percent.
Despite raising taxes 11 times and closing minor loop-holes that would amount to a hill of beans in today’s terms, Ronald Reagan tripled the national debt, never gained control of the deficit, and employment remained stagnant.
Paul Ryan seeks a repeat of the 1980s minus the accompanying taxes increases, and closing an unspecified number of loopholes, if any at all, would not be enough revenue to off-set cutting income taxes again.
Even if you take Paul Ryan at his word that he’s not naming specifics because it’s up to Congress to decide (a Congress that has an approval rating of 10 percent), would you want to leave it up to the same Congress that opposed extending payroll tax cuts while promoting a corporate tax holiday that would allow corporations to repatriate the massive piles of cash from overseas bank accounts?
According to Reuters columnist and Citizens for Tax Justice contributor David Cay Johnston, American corporations have $5.1 trillion in assets piling up. A corporate tax holiday, which House and Senate Republicans tried to insert into December’s payroll tax cut and unemployment extension, would allow corporations to repatriate all of it tax-free.
In June of last year, Paul Ryan said such a corporate tax holiday would be a “good idea.”
It’s a good idea. We ought to have it every day. Instead of having repatriation every seven years, let’s have it every single day by going to a different system.
Paul Ryan, and Mitt Romney, have also endorsed the idea of instituting a territorial tax system. In fact, Romney’s own campaign website promotes adopting a territorial tax system.
-Cut the corporate rate to 25 percent
-Strengthen and make permanent the R&D tax credit
-Switch to a territorial tax system
-Repeal the corporate Alternative Minimum Tax (AMT)
According to Citizens for Tax Justice, adopting a territorial tax system would permanently shelter corporate profits.
First, corporations would have a greater incentive to engage in profit-shifting, meaning practices used to disguise U.S. profits as foreign profits. A common example is the manipulation of transfer pricing to shift corporate profits into tax havens (countries that do not tax, or that barely tax, certain types of profits).
Second, corporations would have a greater incentive to shift actual operations — and jobs — to other countries.
Our current system already encourages these practices because U.S. corporations are allowed to “defer” their U.S. taxes on their offshore profits. But the incentives would be even greater under a territorial system, in which corporations would NEVER pay U.S. taxes on their offshore profits.
Additionally, repealing the Alternative Minimum Tax (AMT) while also lowering the top income tax bracket to 25 percent, which Paul Ryan has proposed, would reduce revenue by $3.2 trillion according to the Center on Budget and Policy Priorities.
Not only would these changes disproportionately benefit high-income households, they would be extremely costly as well. For example, the Tax Policy Center (TPC) has estimated that the proposal reflected in the House bill to create two tax brackets — 25 percent and 10 percent — and eliminate the AMT would lose $3.2 trillion in revenue over ten years.
If you honestly believe Team Romney will ride in on a white steed and slay the Deficit Dragon and create jobs with corporate tax holidays and lower income taxes, I have some survival seeds and doomsday insurance to sell you.