A number of individuals and publicationns spoke out against the Romney-Ryan tax cut plan yesterday following Paul Ryan’s inability to provide details during the vice presidential debate, and among them was Moody’s Chief Economist Mark Zandi.
ZANDI: Yeah, I think the Tax Policy Center study is the definitive study. They’re non-partisan, they’re very good. They say given the numbers that they’ve been provided by the Romney campaign, no, it will not add up. Now, the Romney campaign could adjust their plan. They could say okay I’m not going to lower tax rates as much as I’m saying right now and they could make the arithmetic work. But under the current plan, with the current numbers, no it doesn’t. I’ll say one other thing, though. I think it is important that we do focus on the so-called tax expenditures in the tax code. Those are the deductions, and credits, and loopholes in the code. We need to reduce those, because if we do we’re going to make the tax system fairer, easier to understand and ultimately lead to stronger growth. So that’s the right place to focus. But, no, the arithmetic doesn’t work as it is right now.
The Romney campaign claims the Tax Policy Center is part of the liberal gestapo aimed at casting shade on his Tax Cut Magic plan, but that simply isn’t the case. And they’re not the only ones who have studied the issue and found that Romney’s math simply does not — and cannot — add up without hurting a lot of people.
The Joint Committee on Taxation released their report on the matter yesterday and found that eliminating all itemized deductions in the tax code would only pay for a 4 percent tax cut, far from Romney’s promised 20 percent tax cut.
Repealing all itemized deductions in the U.S. tax code would pay for only a 4 percent cut in income tax rates, according to an estimate from the nonpartisan scorekeeper for Congress that casts doubt on Republicans’ ability to finance lower income-tax rates with base broadening.
The analysis by the Joint Committee on Taxation shows the arithmetical difficulty of an approach that assumes long-favored tax breaks such as deductions for mortgage interest and charitable contributions could be repealed instantly and completely. Republican presidential nominee Mitt Romney proposes a 20 percent income-tax cut and says he would pay for it by limiting tax deductions, credits and exemptions.
The only way to make the math work would be to adjust their plan, as Mark Zandi pointed out, and the only way to pay for a 20 percent tax cut would be to cut deep into tax credits that overwhelmingly aide working families and the middle class.