Igor Volsky flags an important quote from Mitt Romney at an Ohio rally this morning:
“I’m going to champion small business. Small business, where jobs come from. And let me tell you how to do that. One, as Senator Portman said, we’ve got to reform our tax system. Look, small businesses typically pay tax at the individual tax rate. And so, our individual income taxes are ones I want to reform, make them simpler. I want to bring the rates down. By the way, don’t be expecting a huge cut in taxes, because I’m also going to lower deductions and exemptions. But by bringing rates down, we’ll be able to let small businesses keep more of their money, so they can hire more people.”
Either that is an error by Romney, or he is freely admitting that is tax plan would target exemptions and deductions enjoyed by the middle class. Romney has claimed that his tax plan — which contains across the board tax cuts that disproportionately and hugely benefit the rich — will be revenue neutral, and that he will accomplish this by targeting loopholes that benefit the rich. But he hasn’t explained which ones he’d target, and the Tax Policy Center found that his plan could not pay for itself unless he also targeted loopholes enjoyed by the middle class, canceling out their tax cut and then some.
Romney has rejected that analysis. But here he seems to confirm that he would target such loopholes. Indeed, according to Sam Stein, some in Romney’s audience today came away with that impression, though as Romney supporters they didn’t seem overly concerned about it.
What you’re seeing here, again, are the perils that accompany the embrace of a plan that is mathematically impossible. Recently, Romney supporters touted a study that supposedly debunked the Tax Policy Center’s findings. But it didn’t do that at all. In fact, it found that the only way to make Romney’s plan work is to raise taxes on those with incomes between $100,000 and $250,000. Romney subsequently dealt with that by claiming that his tax plan would pay for itself largely through the revenues generated by the economic growth that tax cuts would produce, which is a bunch of hocus pocus.
The problem here is that Romney wants tax cuts for the rich and he wants credit for being a deficit hawk. But as Jed Lewison notes, Romney simply can’t keep all his promises. What makes this even more untenable is the unshakable reality that cutting taxes deeply on the rich is very unpopular. Romney claims he would cut everyone’s taxes. But he can’t do that and also reduce the deficit, unless those tax cuts are offset by policy choices that would turn the middle class’s tax cut into an effective tax hike. And so his tax cuts for the rich would be even more unpopular if Romney leveled with voters on how they would have to be paid for. So Romney can’t do that, either. Yet here Romney appears to have accidentally admitted that he’d target middle class loopholes and deductions. Perhaps he simply made a mistake. But if so, that will only renew questions about how he does intend to pay for his tax plan — questions that he still refuses to answer.