Tuesday, August 14, 2012

Truth Telling and Taxing the Middle Class to Pay for the Fats Cats' Rich Guy Tax Cuts ... But Wait, Romney's the One Proposing a Middle Class Tax Cut ... Is Obama Confused, Mistaken or Lying?

The Obama campaign apparently can't be contented with one lie. It has to go for the two-fer. Or the three-fer. Or perhaps more than that. After all, we have many days to go before the election is held this November.

First, this particular story is about taxes and tax "fairness." You already know the claim about how not raising taxes on the rich (those making $200,000 annually) amounts to a tax cut for the rich, at least according to the President. So I guess that must mean that not raising taxes on others earning below $200,000 amounts to a tax cut for them, again according to the President's thinking.

I wonder if the people getting those "middle class" non-tax-cut-tax-cuts appreciate what the President is doing to save them by not raising -- er-- cutting their taxes. Huh? Confused yet?

Well, as John Paul Jones said, "I have not yet begun to fight." So let's move along and cover some even bigger fish stories. Ok?

Now we have breaking non-news that the tax hikes Obama claims Romney wants to impose on the middle class really aren't proposed tax hikes at all. Unless Romney's lying, of course. And anyone who would cause death by cancer for wives of ex-employees probably shouldn't be trusted to tell the truth about his tax plans. Right?

Well, let's proceed and see just who's telling the truth about all this tax cutting and raising stuff. OK?

We'll begin with Romney campaign --- with a WSJ assist --- explains how to pay for tax cuts:

"The Mitt Romney campaign on Tuesday glowingly sent out an email touting this Wall Street Journal editorial , in which the newspaper rejected an assertion from the Brookings-Urban Institute Tax Policy Center that the exclusion of interest on tax-exempt municipal bonds and the exclusion of interest on life insurance savings won’t be touched.

But that’s not so, the op-ed states, quoting Romney’s senior economic adviser Glenn Hubbard among others.

Since the campaign is sending the op-ed along, one must assume that this is in fact the Romney position. To strip out the double and triple negatives, then, the Romney team is proposing taxing interest from municipal bonds and from life insurance savings."

And here's the referenced editorial that prompted the Romney campaign to come forward (Mathematically Possible, subtitled 'Correcting the false assumptions of Obama's tax gurus'):

"It isn't easy being the intellectual frontmen for President Obama's re-election campaign, as the boys at the Brookings-Urban Institute Tax Policy Center are discovering. Their ballyhooed study of Mitt Romney's tax plan looks worse with each new examination.

Mr. Romney's tax plan would cut income tax rates across the board by 20%, while cutting loopholes that mostly benefit those in the highest income classes. The Tax Policy Center claims it is "mathematically impossible" to finance the rate cut without jacking up taxes by $86 billion on the middle class and poor. Mr. Obama has jumped on the study to support his claims that Mr. Romney would raise taxes, though the Republican has proposed no such thing. (See "The Romney Hood Fairy Tale," August 8.)

The study's biggest distortion is its raw assertion that Mr. Romney would refuse to close certain loopholes. In the appendix, the Tax Policy Center lists, among others, two giant tax deductions that it says would go untouched: the exclusion of interest on tax-exempt municipal bonds, and the exclusion of interest on life insurance savings. The study claims that Mr. Romney won't close these because they are incentives for saving and investment.

One problem: Nowhere do Mitt Romney or his advisers say that these deductions can't be touched. Senior economic adviser Glenn Hubbard says these deductions are definitely "on the table." And by the way, the municipal bond interest exclusion mainly serves to encourage states and cities to borrow and spend more, which is the opposite of a saving incentive. Many reform plans dating to Dick Armey's flat tax in 1995 have recommended eliminating both of these exemptions.

Scholars at the American Enterprise Institute examined what happens to the Tax Policy Center math when this error is corrected. AEI economic research associate Matt Jensen found that "Both of these exclusions largely benefit the wealthy, and, according to the Treasury Department, added together their repeal would net upwards of $90 billion that could be redistributed to lower-income individuals. That would go a long way towards balancing the supposed $86 billion windfall for the rich and tax hike on the middle class and poor, and it could make the impossible suddenly possible."

The AEI analysis warns that these numbers change from year to year, but it concludes that by eliminating these two deductions and a few other smaller ones, Mr. Romney can make his math add up. In other words, poof, no tax hike on the middle class.

This won't stop the Obama campaign from making its false claims, but it ought to at least embarrass the media into questioning them. It should also embarrass the analysts at the Tax Policy Center who claim to be nonpartisan, above-the-fray economists but somehow always seem to provide analysis that serves those who want to raise tax rates."

Summing Up

Lots of crapoloa flying around already. We'll try to keep the truth flowing in a non-partisan manner. 

That said, it's getting and harder not to cheer for the small government guys and even harder not to strenuously oppose the spinsters, or perhaps liars, of the Obama administration, campaign team and mainstream media allies. 

At least that's my view.

Thanks. Bob. 

No comments:

Post a Comment