IN A LETTER published on this page last week, Pierce Scranton, economic policy director for Mitt Romney’s presidential campaign, took issue with an editorial describing the “implausibility” of Mr. Romney’s tax plan. In the debates and other recent comments, Mr. Romney has taken to suggesting that one way to make his $5 trillion tax cut revenue-neutral would be to “pick a number” — say $25,000 — and let taxpayers take that much, and no more, in deductions. The Tax Policy Center, analyzing that proposal, found that it would close only $1.3 trillion of Mr. Romney’s newly dug revenue hole. And no matter how many times the Romney campaign insists that independent studies “have demonstrated the Romney plan works,” that simply isn’t true — not with the parameters (revenue neutrality and no tax increases for those making less than $200,000) that Mr. Romney has set, and not unless you assume economic growth far greater than that predicted by Mr. Romney’s own advisers.
Mr. Scranton described the Tax Policy Center analysis as “riddled with errors,” adding, “It acts as if deductions are the only loopholes Mr. Romney might close, when in fact there are hundreds of billions of dollars in other, non-deduction tax expenditures that could be used to help offset rate reductions and ensure that the plan is deficit-neutral.” You may have heard us pose this challenge before: Great, identify some. Mr. Romney hasn’t been willing to do so. The campaign is now floating the notion of additional caps — for example, on the exclusion from income for employer-sponsored health insurance — which would be a terrific idea, if only Mr. Romney would step up and endorse it.
Mr. Scranton pointed out, accurately, that the $5 trillion figure “includes the effect of lowering corporate tax rates, the cost of which would be handled separately.” Lowering the corporate rate from its current 35 percent to 25 percent, as Mr. Romney advocates, would cost about $1 trillion over the next decade. Again, how would that cost be “handled separately”?
The same question should be asked of President Obama’s proposal for a lower corporate rate, to 28 percent and 25 percent for manufacturers. Mr. Obama’s plan is slightly less expensive, but he, too, has identified pay-fors that are entirely inadequate to offset the cost, such as ending tax breaks for corporate jets and oil and gas subsidies. However, Mr. Obama’s corporate proposal, unlike Mr. Romney’s, is not coupled with trillions more in proposed individual income tax cuts.
Mr. Scranton also accurately noted “President Obama’s absolute lack of a plan when it comes to tax reform.” Fair enough. We would love to see a tax reform plan from the president; the current code is an inefficient mess. But there is an enormous difference between Mr. Obama failing to come up with such a plan and Mr. Romney peddling a scheme with trillions more in cuts and a near-total absence of explanation of how that gap would be filled.