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Romney’s Worst Tax Secret

By Josh Barro

We can debate whether Mitt Romney should have to disclose more about his personal finances. The tax secret Romney can't justify keeping is the detail of his plan to reform the tax code.

Mitt Romney's tax plan is specific in some areas: he'll cut earned income tax rates by 20 percent across the board. But it's vague in others: Romney says he'll pay for rate cuts by broadening the tax base, but he won't say how.

That left the Tax Policy Center to make some educated guesses about how Romney's tax plan would work when they evaluated its distributional impact. TPC found that the plan would cut taxes on the wealthy and raise taxes on the middle class.

Romney doesn't like the Tax Policy Center's analysis of his tax proposals, and he really doesn't like the way Barack Obama is talking about the TPC analysis. But he won't do the obvious thing to rebut their claims: tell us what his tax plan actually is.

Obama has an ad on the air using TPC's numbers to say the Romney plan will raise taxes by as much as $2,000 on middle class families, while cutting taxes for the rich. Romney says that's false -- he says he won't raise taxes on middle income people or lower the share paid by high-income folks.

The problem with Romney's claim is that TPC could find no way to make those numbers pencil. Romney has promised to cut earned income tax rates by 20 percent across the board, and also to eliminate the Alternative Minimum Tax. Even if you eliminate every non-investment tax preference enjoyed by wealthy people, that still leaves them with a tax cut. (Romney has pledged to preserve tax preferences for investment.)

If your tax plan is revenue-neutral, as Romney's campaign sometimes says his plan is, and it cuts taxes on somebody, it has to raise taxes on somebody else. The arithmetic is pretty simple -- the Romney plan has to cut taxes on the rich, and therefore it has to raise taxes on somebody else.

If Romney thinks TPC missed something, and he has a way to make his plan work without a middle class tax increase, he should release the details that show what that is. So long as he refuses to tell us exactly what his tax plan is, Romney has no one to blame for distortions of the plan but himself.

(Josh Barro is lead writer for the Ticker. E-mail him and follow him on Twitter.)

Read more breaking commentary from Josh Barro and other Bloomberg View columnists and editors at the Ticker.

-0- Aug/03/2012 17:26 GMT

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