Mitt Romney’s tax plan would provide millionaires with a tax cut of $87,000, even under the very generous assumption that the plan will be paid for (which would require raising taxes on middle class families). At the same time, Romney calls for rolling back expansions of two important tax credits aimed at helping middle-class and low-income families.

First, Romney’s plan calls for repealing an expansion of the Earned Income Tax Credit, meaning that “a two-parent family raising three children on $30,000 of earnings would lose $1,076 a year.” Romney also wants to roll back an expansion of the Child Tax Credit that was included in the 2009 Recovery Act. As the Tax Policy Center explained, “the more generous refundability level enacted in 2009 is critically important for low-income families“:

Of the $38.3 billion in total child credits that TPC estimates families will claim this year, $29.5 billion comes from the 2001 tax law and another $8.8 billion from the 2009 stimulus. Most of the 2001 increase will go to families in the middle income quintile and higher (see chart). Families with the lowest incomes will get less than 3 percent of the 2001 increase. In contrast, fully 60 percent of the benefits from the 2009 changes will go to families in the lowest income quintile.

Of the total $8.8 billion, about $5.3 billion goes to families in the poorest 20 percent of the country. If the expansion expires, “working families earning less than about $13,350 would be ineligible for any child credit, and families with two children wouldn’t qualify for the full credit until their earnings surpass $26,683.” In 2010, the expansion of the Child Tax Credit kept one million people out of poverty.

A top adviser to Mitt Romney’s presidential campaign denied the nation’s income inequality gap in a Wall Street Journal editorial on Thursday, brushing off the growing concentration of wealth in the hands of the very wealthy by arguing that lower-income Americans are buying more consumer goods.

“Today we hear that the gains from economic growth accrue to the highest-income earners while the standard of living of the poor and middle America stagnates and the gap between the richest and the poorest grows ever wider,” Kevin Hassett and Aparna Mathur argue. “That portrait of the country is wrong“:

Yet the access of low-income Americans—those earning less than $20,000 in real 2009 dollars—to devices that are part of the “good life” has increased. The percentage of low-income households with a computer rose to 47.7% from 19.8% in 2001. The percentage of low-income homes with six or more rooms (excluding bathrooms) rose to 30% from 21.9% over the same period.

Appliances? The percentage of low-income homes with air-conditioning equipment rose to 83.5% from 65.8%, with dishwashers to 30.8% from 17.6%, with a washing machine to 62.4% from 57.2%, and with a clothes dryer to 56.5% from 44.9%.

The percentage of low-income households with microwave ovens grew to 92.4% from 74.9% between 2001 and 2009. Fully 75.5% of low-income Americans now have a cell phone, and over a quarter of those have access to the Internet through their phones.

But this argument, a favorite of conservative think tanks like the Heritage Foundation, is highly misleading. Appliances and commonly used consumer gadgets like cell phones are necessities in the 21st century and are significantly cheaper today than they were just decades earlier. In fact, were families to sell their appliances in order to help pay for food and other basic necessities, many would still struggle — for while prices on microwaves and air conditioners have fallen, “the real everyday basics such as quality child care and out-of-pocket medical costs” are “squeezing the budgets of the poor and middle-class alike.”

Hassett argues that safety net programs like “unemployment insurance, food stamps, Medicaid” help families afford basic needs, further shrinking the nation’s income gap. But these programs are already failing to keep up with need and Romney and Ryan have proposed massive cuts to the safety net in order to pay down the deficit and finance a tax cut plan that is heavily skewed towards the rich.

Their approach would only exacerbate the differences between the rich and poor — a gap that has grown dramatically since the late 1970s. Indeed, compared to the 34 countries in the Organization for Economic Co-operation and Development (OECD), the United States has a Gini coefficient — a number that measures the distribution of income on a scale of 0 (perfectly equal) to 1 (perfectly unequal) — of 0.47 and ranks near the very bottom in inequality. America also suffers from the absolute highest “percentage of national income that went to the top 1 percent” and “has seen income inequality increase at a much faster rate than most other countries.”

This trend is already devastating the American democratic ideals of equal opportunity and upward mobility. Unfortunately, neither Romney nor his advisers can see the problem or offer the kind of tax and economic policies that will help solve it.

Despite the substantial improvements in the housing market recently, foreclosures and underwater mortgages continue to weigh down the economy. One of the most acute problems is that foreclosures don’t only harm the family that loses a home, but also drag down property values for entire neighborhoods, sinking more households underwater (meaning the house is worth less than the amount outstanding on its mortgage).

According to a new report from the Center for Responsible Lending, homeowners will lose nearly $2 trillion in property value due to living near foreclosed properties:

– $1.95 trillion in property value has been lost or will be lost by residents who live in close proximity to foreclosures. These losses include both the spillover impact of homes that have completed the foreclosure process and future losses that will result from homes that have started but not yet completed the foreclosure process.

– Over one-half of the spillover loss is associated with communities of color. Minority neighborhoods have lost or will lose $1 trillion in home equity as a result of spillover from homes that have started the foreclosure process, reflecting the high concentrations of foreclosures in neighborhoods of color.

– On average, families affected by nearby foreclosures have already lost or will lose $21,077 in household wealth, representing 7.2 percent of their home value, by virtue of being in close proximity to foreclosures. Families impacted in minority neighborhoods have lost or will lose, on average, $37,084 or 13.1 percent of their home value.

The Obama administration has implemented several foreclosure prevention programs, but they’ve fallen short of their goals, with just a fraction of the money earmarked for them having been spent. At least the administration has finally come around to recess appointing a replacement for Acting Federal Housing Finance Agency Director Edward DeMarco, who has blocked crucial aid for homeowners.

The list of corporate CEOs and owners who have tried scaring their employees into voting for Mitt Romney got a bit longer this week thanks to Milwaukee businessman Mike White.

White, the owner of the industrial equipment firm Rite-Hite, sent his 1,400 employees an email this week warning them that they needed to “understand the personal consequences to them of having our tax rates increase dramatically if President Obama is re-elected,” according to the Milwaukee Journal-Sentinel, which was sent a copy of the correspondence. The email goes on to warn that Rite-Hite would consider dropping its contribution to the workers’ retirement plan, blaming tax hikes that White says are on the way if Obama wins a second term, and that workers will lose their health care:

“The tax rate we pay is not 17%, as Warren Buffett would have you believe; with state taxes it is roughly 45%. President Obama has announced that our planned tax rate would increase to roughly 65%, reducing our after tax income by 36% and dramatically reducing, if not eliminating, your and my RSP contributions.”

As a result, White said the company’s profits would not be reinvested. Instead, he wrote, “the money will be sent into the abyss that is Washington, D.C. So, on top of the burden of having your personal taxes increase dramatically, which they will, your RSP contributions and healthy retirement are also at risk, all for the sake of maintaining an over-sized government that borrows 42% of every dollar it spends.”

White also wrote that Obama’s re-election means there is a “good chance of losing Rite-Hite insurance and being put into Obamacare.”

White is no stranger to Republican politics. He was the single largest individual donor to Gov. Scott Walker’s (R-WI) 2010 election, and in fact was named in a lawsuit for exceeding the state’s $10,000 cap on campaign contributions.

In the last few weeks, several CEOs — themselves all multi-millionaires — warned employees that if Obama wins the election in two weeks, their jobs could hang in the balance. Rite-Hite employees were taken aback by the message, telling the Journal Sentinel they felt threatened by the email.

It’s unclear whether White’s email was in response to Mitt Romney’s plea for business owners to pressure their employees to vote for him. In a June conference call, Romney told CEOs, “I hope you make it very clear to your employees what you believe is in the best interest of your enterprise.”

INDIANAPOLIS — The National Federation of Independent Businesses — an organization that presents itself as “The Voice of Small Business,” but actually favors corporate interests in its lobbying efforts — kicked off a nationwide bus tour this week to protest President Obama’s “You didn’t build that” comments.

The “I Built My Business Tour” began Monday in Wisconsin and has included stops in Illinois and Indiana. It will continue through Ohio, Pennsylvania, and Virginia before ending in Florida two days before the election.

At a tour stop in Indianapolis Wednesday, NFIB members and Indiana state lawmakers talked about the importance of small businesses to the economy, with several mentioning that they were “appalled” or “shocked” by Obama’s well-worn “You didn’t build that” comments, made at a campaign event in July. Obama’s comments have been used by the Republican National Committee and other organizations, even though the full context, in which Obama cites the role of government in helping foster business growth, is rarely provided.

The NFIB has played an extensive role in opposing Obama’s policies: it led one lawsuit against the Affordable Care Act, the health care law it says is causing more “uncertainty,” and it opposes his plan to raise taxes on incomes over $250,000 (even though, as Mother Jones noted, only 3 percent of small business owners fit that bill).

NFIBExposed.org, a project of the Center for Media and Democracy, found that 98 percent of the NFIB’s campaign contributions in the 2012 cycle have gone to support Republican candidates, while 100 percent of its advertising budget has been spent either supporting Republicans or opposing Democrats.

Glenn Hubbard, Mitt Romney’s “go to” economist and potential Treasury Secretary, said during a debate in New York on Wednesday that “the rich are taxed enough” and argued that asking the super wealthy to pay more “is both counter-productive and unnecessary to fund the government we want”:

While steering clear of specifics, Hubbard told the audience at the Intelligence Squared Debate that “higher tax rates won’t necessarily produce enhancements in revenue.”

“We can and should achieve fairness and growth without taxing the rich more than they are today,” he said.

The comments conform with Romney’s tax cut proposal, which offers a 20 percent across-the-board tax cut for all income brackets, ensuring that the richest Americans receive an $87,000 tax cut on average (even if Romney fully finances his plan.)

But millionaires, who received an average annual tax cut of more than $110,000 a year in the last nine years as a result of President Bush’s tax cuts, don’t need more tax relief. In fact, during a period of unsustainable budget deficits — and raising income inequality — they’ve seen their tax burden shrink. The highest tax rate on income “has been steadily falling over the past 50 years.” Taxes on investments are historically low and the percentage of income the wealthy and super wealthy pay in taxes has plunged.

Lower taxes on the wealthy hasn’t created more economic growth. In fact, under the Bush administration’s economic policies, the country saw tepid job growth, 8.3 million people fell into poverty and child poverty rose by 3 percent. A recent analysis from the Center for American Progress found that “in the past 60 years, job growth has actually been greater in years when the top income tax rate was much higher than it is now.” In fact, “if you ranked each year since 1950 by overall job growth, the top five years would all boast marginal tax rates at 70 percent or higher.”

Eleven states will give voters an opportunity to change state tax policy on election day this year. However, most of these initiatives — according to Citizens for Tax Justice — “would make state taxes less fair or less adequate (or both).”

But some ideas are worse than others. Here are the three worst ideas voters will decide on:

So-called “Taxpayer Bill of Rights” (TABOR): Florida voters will decide whether to accept Amendment 3, which limits public spending and revenue collection through a proscribed and — according to the Center on Budget and Policy Priorities (CBPP) — flawed formula. It also requires a supermajority of the legislature to override the revenue limit. TABOR virtually guarantees revenue shortages and makes it extremely difficult to raise more, so Amendment 3 will likely lead to drastic cuts in public spending. As the CBPP shows, if all the spending cuts were enacted at once, revenue losses would exceed $11 billion in ten years.

Colorado is the only state to have enacted TABOR, but after 13 years of harmful budget cuts, Colorado voters suspended it in 2005.

Supermajority requirements for changing tax policy: Both Michigan and Washington are debating requiring a two-thirds legislative supermajority in order to end tax breaks or increase tax rates. Such a requirement virtually guarantees legislative gridlock and a host of other problems.
In 2010, Washington put in place a supermajority requirement for revenue changes, known as I-1053, but it was struck down as unconstitutional in May 2012.

Again, history provides a useful lesson. California passed a supermajority requirement in 1978, Prop 13, which Time called “the root of California’s misery.” Among the many problems Prop 13 caused, it resulted in legislative dysfunction and multi-billion dollar drops in spending and revenue. By design, revenue plunged 60 percent the first year after the law’s passage, and education funding dropped.

Since the legislature is virtualy unable to raise taxes, proposals to increase taxes come through popular referendum.

Repealing the estate tax: Oregon voters will decide on Measure 84, which gradually repeals the estate tax and will cause a $120 million loss in revenue for the state every year. Though other parts of the law are unclear, it could potentially “open a new egregious loophole allowing individuals to avoid capital gains taxes on the sale of land and stock by simply selling property to family members.” If this analysis is accurate, Oregon would lose up to $175 million by 2021.

There is no evidence to suggest repealing the estate tax increases the number of wealthy tax payers who live in a state, a constant claim of proponents. In the end, repealing the estate tax would be an extremely regressive move and would only benefit the very wealthy.

– Greg Noth