Our guest blogger is Michael Linden, director of tax and budget policy at the Center for American Progress Action Fund.
According to our new analysis, the economic plan offered yesterday by GOP presidential candidate Mitt Romney would deliver a massive $6.6 trillion tax cut that would primarily benefit the very wealthy and corporations. After accounting for the added interest costs that we’ll have to pay, the total cost of Romney’s plan grows to $7.8 trillion over the next 10 years.
Romney lays out several tax policies, all of which primarily benefit the super wealthy.
– Extend all the Bush tax cuts: While everyone got a tax cut from President Bush, the extremely wealthy got the lion’s share of the benefit. In 2010, fully half of the entire benefit from all of the Bush tax cuts flowed to the richest 5 percent of Americans. Extending them all (plus indexing the Alternative Minimum Tax to inflation) will cost nearly $4 trillion, not including interest costs.
– Eliminate capital gains taxes for middle income households: Capital gains tax rates are already extraordinarily low, but middle class Americans don’t enjoy much benefit from that. According to the Tax Policy Center, 67 percent of the entire benefit from lower capital gains tax rates goes to millionaires. Romney’s proposal won’t cost much because it won’t benefit many people.
– Cut corporate taxes: Romney’s proposal to cut the corporate rate by about a third would cost more than $900 billion. Needless to say, this cut would benefit mainly the very rich and corporations.
– Eliminate estate taxes: Right now, only the very biggest, richest fraction of a percent of all estates pay any tax at all. Eliminating even this paltry amount would cost about $175 billion, and would, of course, only benefit a few extremely wealthy heirs and heiresses.
These, along with some other tax changes suggested by Romney (repealing the Affordable Care Act, for example) would result in federal revenue averaging just 16.7 percent of gross domestic product. That’s far below the 20 percent of GDP that Romney says he wants to spend (though, of course, he neglected to lay out what he would cut to get there). It’s even below the levels suggested by House Republican Budget, which abolished Medicare as we know it, slashed Medicaid, and still didn’t balance the budget until 2040.
Taken together, Romney’s fiscal policies would be even worse than the House Budget. His spending levels are the same — though he provides few details as to what he would cut to accomplish this — but his revenue levels are even lower. The result would be continued unsustainable deficits and more debt. In fact, Romney’s plan would yield approximately $6.5 trillion in deficits from 2013 through 2021.
Given these facts, it is odd that Mitt Romney also supports an amendment to the U.S. constitution that would require balanced federal budgets. Romney’s plan doesn’t even come close to balancing the budget, instead resulting in unsustainable deficits and growing debt.
So, how does Romney deal with the fact that his own fiscal plan would be unconstitutional if President Romney got his way? He doesn’t. Either he hasn’t done the math, or he’s hoping you won’t notice his numbers don’t add up. Either way, it doesn’t reflect all that well on him or his economic “plan.”