So there I was, a day before Mitt Romney formally presented his
"Restore America's Promise" tax plan to the Detroit Economic Club,
discussing its provisions with the Romney campaign and with my
friends at the National Taxpayers Union and Americans for Tax
Reform.
I learned enough to be
able to honestly state in a telephone news conference that it's good
to see a serious plan to fix the economy, to reassure job-creating
businesses that someone is on their side who recognizes the value of
stability in the tax code.
Those who pay their
business taxes using their individual tax forms have long complained
about the Alternative Minimum Tax (AMT), another one of those tax
hikes "on the rich" that was enacted so long ago it has now dribbled
down to the middle class. The Romney plan would repeal the AMT while
cutting marginal tax rates across the board for all taxpayers.
In fact, all the
Republican candidates would repeal the AMT, while President Obama
would continue to allow it to increase taxes on small businesses —
you know, the ones we need to start creating more jobs.
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Reagan's Erie Pub Toast
The Boston Globe ●
Jan 26, 1983 |
But all of the
candidates, even the president, propose cutting the corporate
income-tax rate.
Remember when President
Reagan visited Massachusetts, stopping for a beer at the Erie Pub on
his way to meeting with high-tech executives at Millipore? I was at
that meeting, and can tell you that it was a surprise when he
impulsively said he'd like to repeal the corporate income tax to
stimulate the economy.
Since then, the 35
percent U.S. corporate rate has become more obviously out of sync
with the lower corporate rates of other industrial countries, making
us even less competitive.
So President Obama
would cut the rate to 28 percent, Mitt Romney to 25 percent, Rick
Santorum to 17.5 percent (0 percent for manufacturing concerns), and
Newt Gingrich to 12.5 percent. Ron Paul would repeal the 16th
Amendment to abolish all income taxes, while focusing on the sales
tax for revenue to fund his constitutionally limited government.
We can all grasp Ron
Paul's plan. The others, especially Santorum's, get much more
complicated around individual rates, capital gains, overseas
corporate rates and deductions. I'd planned to spend a lot more time
analyzing these until I was reminded that none of this matters.
Romney presented his
plan in Michigan on Feb. 24 and casually mentioned his devotion to
that state's automobile companies.
"I drive a Mustang and
a Chevy pickup truck. Ann drives a couple of Cadillacs, actually.
And I used to have a Dodge truck," Romney noted.
As soon as I heard
this, I knew that public discussion of complicated tax policy wasn't
going to happen. The Big News would be that Ann has two Cadillacs,
and the obvious explanation — that she keeps one each at her East
Coast and West Coast homes — doesn't help with those who can't get
over the fact the Romneys are rich. I don't pretend to understand
this media non sequitur, from capital gains to Cadillacs. But I
moved on from my attempt to compare tax rates to the various plans'
effect on the national debt.
Using dynamic models,
tax cuts can create jobs and lead to revenue growth. Whether they
reduce deficits depends on whether government spending is also cut
enough to prevent more debt while we wait for the economy to respond
to private-sector stimulus.
U.S. Budget
Watch, a nonpartisan group whose mission is "to increase
awareness of the important fiscal issues facing the country," has
analyzed the candidates' tax proposals. It released
a report this week about the potential impact of each plan on
the national debt. Its conclusion is that none of the plans, except
Paul's, would cut spending enough to avoid more deficits.
Using 2021 as the
target year, Budget Watch claims that Gingrich would increase the
debt by $7 trillion, Santorum by $4.5 trillion and Romney by $2.7
trillion.
Maybe. Between us, I
don't think anyone can analyze what will happen if a president is
actually addressing the economy, instead of trying to "spread the
wealth around." So much of economics is psychological. Just having a
serious president taking the national debt seriously will have an
impact.
So I'll take the quick
and easy position that, if Romney's plan increases the deficit the
least, it's the best plan, except for Paul's, which is far too
radical — until it becomes inevitable. Continue to delay the tough
decisions, and they will be made for us.
The only decision we
Massachusetts voters can make right now, though, is for whom we will
vote in the Super Tuesday primary on March 6.
Republicans must decide
which of their candidates can beat Barack Obama. We Massachusetts
independents can take a Republican ballot, too.
I've watched every
debate, and studied all the tax plans. The Republicans' are all
better than the president's, which, among other wrong things, wants
to increase taxes on the oil companies, who would respond by
increasing our price at the pump.
For me, it comes down
to who has the best chance to defeat Obama in November and turn
around the economy, then reduce deficits and stabilize the national
debt before it's too late. I still think that's Mitt Romney.