The Romney Hood Fairy Tale sets the record straight about what the rich pay in taxes:
"As he escalates his class war re-election campaign, President Obama
has taken to calling Mitt Romney's economic plan "Robin Hood in reverse"
or "Romney Hood." The charge is that even though Mr. Romney is
proposing to cut tax rates for everybody across the board, Mr.
Romney will finance this by imposing a tax increase on the middle class.
His evidence is a single study by the Tax Policy Center, a liberal
think tank that has long opposed cutting income tax rates.
The political left always says Daddy Warbucks gets all the tax-cut
money. So this is hardly news, except that the media are treating this
joint Brookings Institution and Urban Institute analysis as if it's
nonpartisan gospel. In fact, it's a highly ideological tract based on
false assumptions, incomplete data and dishonest analysis. In other
words, it is custom made for the Obama campaign.
The heart of Mr. Romney's actual proposal is a 20% rate
cut for anyone who pays income taxes. This means, for example, that the
10% rate would fall to 8%, the 35% rate would fall to 28% and all the
brackets in between would fall as well. The corporate tax would fall to
25% from 35%. . . .
Second, the Romney campaign says it expects to increase revenues by
increasing the rate of economic growth to 4%, up from less than 2% this
year and in 2011. (Separately from tax reform, but clearly relevant to
budget deficits, Mr. Romney says he'd gradually reduce spending to 20%
of the economy from the Obama heights of 24%-25%.)
The class warriors at the Tax Policy Center add all of this up and
issue the headline-grabbing opinion that it is "mathematically
impossible" to reduce tax rates and close loopholes in a way that raises
the same amount of revenue. They do so in part by arbitrarily claiming
that Mr. Romney would never eliminate certain loopholes (such as for
municipal bond interest), though the candidate has said no such thing.
Based on this invention, they then postulate that Mr. Romney would
have to do something he also doesn't propose—which is raise taxes on
those earning less than $200,000. In the Obama campaign's political
alchemy, this becomes "Romney Hood" and a $2,000 tax increase.
The Tax Policy Center also ignores the
history of tax cutting. Every major marginal rate income tax cut of the
last 50 years—1964, 1981, 1986 and 2003—was followed by an unexpectedly
large increase in tax revenues, a surge in taxes paid by the rich, and a
more progressive tax code—i.e., the share of taxes paid by the richest
1% rose. . . .
So on four separate occasions what TPC says is "mathematically
impossible"—cutting tax rates and making the tax system more
progressive—actually happened. Hats off to the scholars at TPC: Their
study manages to claim that what happens in real life can't happen in
The TPC analysis also fails to
acknowledge how highly dependent the current tax system is on the very
rich. As the Tax Foundation explains in a recent report based on CBO
data: "The top 20 percent of households pay 94 percent of federal income
taxes. The bottom 40 percent have a negative income tax rate, and the
middle quintile pays close to zero."
This reality is treated as a state secret in Washington because it
refutes Mr. Obama's campaign theme that the rich are undertaxed. . . .
Another reality is that
more than one-third of Americans pay no income tax. Many in this group
contribute payroll taxes, but for most their only connection to the
income tax is to receive refundable tax credits (in the form of a check)
that are effectively government payments. This is the basis for the Tax
Policy Center's wild claim that the Romney plan raises taxes on those
who earn less than $30,000—a group that now has a negative tax liability.
The claim is that reducing various
refundable tax credits that are cash payments from the government are a
"tax increase." By this logic, reducing unemployment benefits or food
stamps would also be a tax increase. . . .
What the Obama campaign and its acolytes at the Tax
Policy Center are really saying is that tax reform that reduces rates
and makes all income groups better off is impossible. This is a far cry
from what Democrats used to believe, going back to Jack Kennedy in 1964
and in the 1980s when prominent Democrats Bill Bradley, Dick Gephardt
and Don Rostenkowski helped to write the 1986 tax reform.
The Obama Democrats, by contrast, favor income redistribution and
raising rates on the wealthy for their own partisan political sake, no
matter the damage to growth, the cost in lost revenue, or a less
progressive tax code as the rich exploit loopholes.
The great irony is that the candidate most likely to raise taxes on
the middle class is Mr. Obama. He could raise every tax on the rich he
proposes and still not come up with enough revenue to finance the
increases in spending he wants in a second term. Where do you think
he'll turn then?
Romney Hood indeed.
Today the top 20% pay 94% of federal income taxes.
Why not just make it 100%?
Then the 80% can outvote the 20% and keep the government growing exponentially until, that is, we become Greece and are unable to tax or borrow any more.