Our guest blogger is Seth Hanlon, Director of Fiscal Reform at the Center for American Progress Action Fund.
A recent study by the nonpartisan Tax Policy Center found that Mitt Romney's tax plan, which purports to be "revenue neutral," would require households with incomes under $200,000 to pay higher taxes, on average, in order to finance tax cuts for the rich. In response, Romney economic advisor Martin Feldstein penned an op-ed in today's Wall Street Journal claiming that Romney's plandoes not require such a tax increase.
Though Feldstein uses at least three sleights of hand to obscure the point, his analysis actually confirms TPC's central finding. Here's why:
1) Feldstein ignores Romney's $1 trillion corporate tax cut, which is paid for by individual income tax increases.
Feldstein purports to show how reductions in tax breaks for high-income households could pay for a handful of Romney's tax policies, including cuts in tax rates for individuals. But Feldstein conveniently ignores Romney's tax cuts for corporations.
Romney's plan would give corporations an "immediate" tax cut, cutting their rates from 35 percent to 25 percent. This tax cut would cost $96 billion in 2015 according to the Tax Policy Center (TPC) and more than $1 trillion over ten years. The TPC report did not even factor this massive corporate tax cut in their analysis of Romney's plan under the very generous assumption that it would be fully paid for by eliminating business tax breaks.
But the Romney campaign has since made clear that the $1 trillion in corporate tax cuts aren't paid for by any reductions in corporate tax breaks. Therefore, as the TPC researchers have noted, Romney's corporate tax cuts would require "even larger cuts to tax expenditures [i.e. tax breaks], and correspondingly larger increases in taxes on middle- and/or lower-income taxpayers," than their original study found. Feldstein simply ignores all of this.
rest at
http://thinkprogress.org/economy/2012/08/29/769401/hanlon-feldstein-middle-class/
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