Annie Lowrey
New York Times fact checker
Alan: Achieving $5 trillion in revenue by eliminating deductions and tax code loopholes is more hopeless than getting blood from a turnip.
Reagan Budget Director David Stockman says Republicans couldn't, under penalty of death, come up with $50 billion in budget cuts. "(Extending the Bush tax cuts is) rank demagoguery. We should call it for what it is. If these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. So, to stand before the public and rub raw this anti-tax sentiment, the Republican Party, as much as it pains me to say this, should be ashamed of themselves."
http://paxonbothhouses.blogspot.com/2012/08/paul-ryans-awkward-performance-at-iowa.html
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Fact Check: A $5 Trillion Cut
A number of readers have asked the following question: “How accurate are President Obama’s claims about Mitt Romney’s $5 trillion tax cut?”
In the first debate segment, Mr. Obama and Mr. Romney repeatedly sparred over whether or not Mr. Romney has proposed a $5 trillion tax cut.
It is true that Mr. Romney has proposed “revenue neutral” tax reform, meaning that he would not expand the deficit. However, he has proposed cutting all marginal tax rates by 20 percent — which would in and of itself cut tax revenue by $5 trillion.
To make up that revenue, Mr. Romney has said he wants to clear out the underbrush of deductions and loopholes in the tax code. But he has not yet specified how he would do so, opening himself to persistent Democratic attacks.
This week, in an interview with a Colorado television station, Mr. Romney did shed some light – floating the idea of capping each household’s deductions at $17,000.
“As an option, you could say everybody’s going to get up to a $17,000 deduction. And you could use your charitable deduction, your home mortgage deduction, or others, your health care deduction, and you can fill that bucket, if you will, that $17,000 bucket that way,” he said. “Higher-income people might have a lower number.”
The deduction cap has the virtue of avoiding the tough negotiations over which tax expenditures to unwind. Many tax expenditures are highly popular, like the deduction for charitable giving. Moreover, many are important to the stability of the economy. Suddenly ending the home mortgage interest deduction, for instance, would threaten destabilizing the housing market.
But a number of unanswered questions about Mr. Romney’s tax plan remain.
For instance, Mr. Romney did not address how his proposed cap on deductions would affect tax credits. (Generally, deductions lower a given family’s level of taxable income and credits erase part of their overall tax bill.)
It is also unclear whether his proposal to cap deductions would raise enough revenue to pay for his income tax rate cuts – at least not without increasing the tax burden on families making less than $200,000 a year, which Mr. Romney has vowed that he will not do.
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