“Their plan on Social Security, the one they have now, would raise taxes on your Social Security. Right now the majority of seniors, over 50 percent, pay zero income tax on their Social Security benefit. You have another group that pays no more than half — income tax on half of that. And you have another group that pays income tax on 15 percent. Well, if Governor Romney's plan goes into effect, it can mean that everyone — every one of you, would be paying more on — taxes on your Social Security. The average senior would have to pay $460 a year more in tax for their Social Security. Ladies and gentlemen, that's why these — while these guys are out there having — hemorrhaging tax cuts for the super-wealthy.”
— Vice President Biden, speech at Boca Raton, Fla., Sept. 28, 2012
“The Romney/Ryan plan could raise taxes on seniors by approximately $500 a year — all to support tax cuts for multi-millionaires. Send an eCard to say that's just not right.”
— Obama Web site
Cue the scary music. Having repeatedly — misleadingly — beaten up the GOP presidential ticket for its plan to overhaul Medicare, Vice President Biden traveled to Florida last week to allege that Mitt Romney plans to raise taxes on Social Security benefits.
The Romney campaign insists that this is false and that Romney has no plan to raise anyone’s taxes. We will note that the Obama Web site simply says Romney “could” do this, but the more enthusiastic vice president repeatedly says it “would” happen. So how does Biden figure this?
The root of this assertion is Romney’s still-vague plan to cut tax rates by 20 percent and make up any lost revenue by removing tax preferences and loopholes. The problem is that the most comprehensive study, by the nonpartisan Tax Policy Center, found that the math is impossible — there are just not enough tax preferences for the wealthy to make the plan revenue neutral without also raising taxes on the middle class. (The study was based on what few details have been released on the Romney plan.)
The Romney campaign has disputed the study without ever explaining how it would make the numbers add up. In fact, other studies cited by the campaign actually undercut its assertion that the plan is workable. Politically, of course, no lawmaker would support a plan that would raise taxes on the middle class while cutting them for the wealthy, so presumably Romney would modify his tax plan if he were elected president. But in campaign mode, he does not want to admit any error.
The Obama campaign relies on the Tax Policy Center report as its template for producing Biden’s $460 figure. First, using Joint Committee on Taxation data, it calculates that the average tax savings from excluding some or all Social Security benefits is $987 for seniors making less than $200,000. (For couples, Social Security is tax-free when income is below $32,000, up to 50 percent is taxable between $32,000 and $44,000, and up to 85 percent is taxable over $44,000.)
The campaign then reduces that figure by 20 percent because Romney would cut rates by that amount. Finally, it multiplies that by 58 percent because the Tax Policy Center concluded that “revenue neutrality would require eliminating 58 percent of total tax expenditures for these households.”
But notice that this is an average of an average for a provision that Romney insists he will never implement. The exact interplay for individuals is difficult to predict. (A fact sheet provided by the Obama campaign does provide calculations for various income groups.)
The Tax Policy Center also says that the average increase in taxes for everyone making under $200,000 is $500.
“Romney has not proposed to do that, and we have not argued that Romney will do that,” said William Gale of the Brookings Institution, one of the study’s co-authors. “This is not a Tax Policy Center calculation, but it is consistent with our stuff.”
After the Tax Policy Center study was released, Donald Marron, director of the center, cautioned that the Obama campaign was overinterpreting its findings:
“I don’t interpret this as evidence that Governor Romney wants to increase taxes on the middle class in order to cut taxes for the rich, as an Obama campaign ad claimed. Instead, I view it as showing that his plan can’t accomplish all his stated objectives.”
The Romney campaign insists that its plan for Social Security “does not include any changes in Social Security for anyone who is in or near retirement.” But the statement refers to Romney’s Social Security plan and does not directly answer the question about whether the taxation of Social Security benefits would be altered as part of his tax proposal. (UPDATE: The Romney campaign says that this statement should be read as including a rejection of any tax increase on Social Security benefits.)
Generally, the Romney campaign has not been explicit on this point. In a YouTube video of a Paul Ryan town hall, posted by BuzzFeed, Romney’s running mate said there was “plenty of fiscal room” in the Romney tax plan to keep tax deductions for home mortgages, charitable contributions and employer-provided health care as “important preferences for middle-class taxpayers.” He did not mention keeping Social Security benefits from taxation.
And in an interview with a Denver television station this week, Romney indicated that he would place a cap of $17,000 on all deductions. This would not require singling out specific deductions, but he did not specifically mention the exclusion for Social Security benefits. “You could use your charitable deduction, your home mortgage deduction, or others — your health-care deduction,” he said.
The Pinocchio Test
Given Romney’s lack of specifics in his tax plan — and legitimate questions about whether the math adds up — it is certainly fair game for the Obama campaign to point out contradictions or trade-offs.
The campaign’s literature tends to say such tax increases “could” happen. But Biden especially goes too far by declaring that this “would” happen, as if this were an actual proposal put on the table by the Romney campaign. It certainly hasn’t been officially taken off the table — but that’s not the same thing at all.
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