I am so tired of Mitt Romney, but I’ve got to write about this. The Serious Set are all a titter about Romney’s announcement that he is going to cap deductions at $17,000. I don’t know exactly what this will do to middle class income taxes. But this is more or less the same old song: Romney wants to change federal income taxes such that the top 1% will save huge amounts of money. He would prefer to make the middle class pay for this, but it is politically untenable. So instead, he plans to make the upper class (minus the 1%) pay for it.
This is the main way that Romney has countered the Tax Policy Center study. The claim is, “We don’t have to raise taxes on the middle class; instead, we can decimate the well off making between $100,000 and $200,000.” I don’t cry a lot of tears for this group of people, but it is clearly wrong to screw them for the sake of the 1% who, to put it mildly, have done really well by the tax code.
But this fact doesn’t seem to bother Ezra Klein, who tweeted:
In general, I like the direction Romney is going here. Capping deductions seems more achievable than picking through them one by one.
But if you actually read Ezra Klein’s column on it, it is just a bunch of questions. And it ends in a way that—to me—is a big “Fuck you!” to the Romney campaign:
That’s a promising approach. The question now is whether we get more details from the Romney campaign, or whether they’re just trying to throw something out there so they have something vaguely plausible sounding to say when pressed for tax specifics during the first presidential debate.
I asked the Romney campaign for more details and spokeswoman Andrea Saul sent this back:
Governor Romney’s tax reform plan will jumpstart economic growth, cut the tax burden on the middle-class, and lower tax rates across-the-board. He will pursue revenue and distributional-neutrality in reforming the tax code. There are a range of policy options, Gov. Romney referenced one illustrative example, to achieve these goals.
In other words, “I contacted the Romney campaign and they provided me with the usual bullshit: trust me!”
We get the same thing from Josh Barro. But more so. Barro is very impressed with Romney’s new direction. But when he gets down to the specifics, he’s even more skeptical. His point 6 is particularly telling:
Any plan that keeps Romney’s promises on cutting rates 20 percent and holding the middle class harmless has to sacrifice revenue neutrality, and I expect this plan will fall far short of raising the roughly $5 trillion over 10 years that is needed to offset Romney’s tax rate cuts.
In other words: it’s bullshit, but I’m a conservative so, “Yea!”
Note the timing of this announcement: just before the debate. This is so it will be out long enough to sound credible during the debate but not long enough for the Tax Policy Center to analyze it and show that it is just as bad as his previous proposals.
Update (3 October 2012 1:31 pm)
Over at WonkBlog, they are very interested in this topic—big surprise. Suzy Khimm has written an article, Who’s likely to be hit by Romney’s deduction cap? The rich and middle-class urbanites. It notes that 25% of the mortgage interest deduction goes to the 1%. This is shockingly high, but it doesn’t counter my point. What I’m talking about is that Romney will not get rid of the low “any investment is capital improvement” capital gains rate, nor will he even get rid of the “carried interest” loophole. This is what makes the income tax system so dysfunctional (even though it is payroll taxes that are the most unjust of the federal taxes).
In addition, Khimm talks to Roberton Williams, who is a senior fellow at the Tax Policy Center. She continues:
But Williams points out that a $17,000 itemized deduction cap is also likely to punish middle-class taxpayers who live in areas where home prices and/or state and local taxes tend to be high—namely, urban areas of California, the New York metro area, other parts of the Northeast, and the Washington, D.C. metro area. For example, the owner of a $450,000 house with a 4 percent interest rate on a 30-year mortgage would already be qualified for a $18,000 mortgage interest deduction, Williams points out.
I doubt Romney planned that, but it works out well for him: screw the people who won’t vote for Romney anyway.
Also at WonkBlog, Dylan Matthews writes, Mitt Romney wants to cap tax deductions. Here are five ways to do it. The problem with this is that it gives Romney credit and help that he doesn’t deserve. He’s not serious about this proposal. As his campaign has been very clear about, this is just an “illustrative example.” In other words: don’t worry your pretty little heads about it, when the time comes we’ll make something work.
Just for the record, I know how they will make it work. They will give those 20% tax breaks. And the debt will increase. But it won’t matter, because Republicans will be in the White House. The deficit only matters if a Democrat is in power.