Mitt Romney’s tax plan is a winner, and, lacking a serious rebuttal, President Obama settles for fabricating charges.
In a campaign stop at Rollins College in Florida last week, Barack Obama suggested that the middle class should resent Mitt Romney’s tax proposals:
“I want everybody to understand here — he’s not asking you to pay an extra $2,000 [in taxes] to reduce our deficit; he’s not asking you to pay an additional $2,000 to help care for our seniors; he’s not asking you to pay an additional $2,000 in order to rebuild America or to fight a war,” the president said. “He’s asking you to pay more so that people like him can pay less.”
But here is the actual truth: Mitt Romney is not asking the middle class or anyone else to pay more taxes. Mitt Romney is proposing to cut tax rates for everyone, across the board. That would finally liberate the economy for a long overdue recovery. Increased revenues from that booming economic growth, combined with savings from cutting Obama’s runaway spending and closing loopholes that mostly benefit the highest income taxpayers, would enable a U-turn, from the four straight highest deficits in world history to a balanced budget in 5 years. The roadmap for doing that is Paul Ryan’s 2013 budget, which has already been adopted by the Republican controlled House. (The Democrat majority Senate, by contrast, has never shown up for work.) This is classic tax reform, cutting rates and closing loopholes.
Obama’s Tax Plan: Higher Taxes, No Jobs
The only candidate in this race proposing to increase taxes is Barack Obama. He has already enacted increases in the top rates of virtually every major federal tax, which will go into effect January 1. That is when the tax increases of Obamacare will hit, and when the Bush tax cuts will expire. (Remedial education for Obama supporters: “Bush tax cuts expire” means tax increases).
As a result, the top two income tax rates are already scheduled in current law to increase by nearly 20 percent; the capital gains tax rate is slated to soar by nearly 60 percent; the tax rate on dividends will explode to nearly three times its current level; the Medicare payroll tax rate will rocket up by 62 percent for disfavored taxpayers (the nation’s job creators, investors, and successful small business entrepreneurs); and the death tax will rise further from the grave with a 57 percent increase in the top rate.
This is all on top of the corporate income tax rate, which under President Obama is already the highest in the industrialized world at 35 percent — or nearly 40 percent counting state corporate rates on average. Even Communist China has a lower corporate income tax of 25 percent. The average in the social welfare states of the EU is less than that. Germany has an 18 percent federal corporate rate. Canada, which has been booming under a conservative government, is now at 15 percent.
American businesses are uncompetitive in the global economy under these tax policies. But with President Obama there is no relief in sight. Instead he is continually barnstorming the country calling for still more tax increases. Under his so-called Buffett rule, the capital gains tax rate would increase by 100 percent, to the fourth highest in the industrialized world.
Then in 2014, the Obamacare mandate tax will go into effect, requiring every employer and every worker in the country to buy the expensive health insurance plan that the federal government decides you must have. That is another tax increase on the middle class, which — in addition to all the other tax increases in Obamacare they will have to pay — trashes Obama’s central campaign promise in 2008 not to raise taxes on working people.
Obama promised in 2008 that he would only increase tax rates on the wealthy — the nation’s job creators, investors, and small business owners — to the levels that existed under President Clinton. But this talking point, which he and his brain dead supporters are still repeating, is now long outdated. In total, these tax increases will raise top rates well beyond the Clinton rates, and in an even worse context. Other countries have learned the lessons of Reaganomics and slashed rates on capital in particular since then, and so they are already outcompeting America today. Thus, the combined effect of all those tax rate increases on “the rich” would be a renewed recession, double-digit unemployment, and a federal deficit that tops $2 trillion.
The Romney Tax Plan
Mitt Romney, in sharp contrast, actually has a very good tax plan that will get the economy booming again and restore the American Dream. The key is reducing tax rates, in particular marginal tax rates, which are the rates that applies to the next dollar of income. Marginal rates determine the incentive for productive activity, such as working, saving, investing, expanding businesses, starting businesses, or creating jobs.
Romney’s tax plan proposes to:
• Extend all of the Bush tax cuts that are scheduled to expire in January.
• Repeal the unfair death tax, which taxes yet again a lifetime of savings that have already been taxed multiple times.
• Repeal all of the Obamacare taxes.
• Repeal the Alternative Minimum Tax (AMT), which was originally meant to stop the richest from avoiding taxes altogether, but which increasingly applies to millions in the middle class.
• Cut income tax rates by one-fifth across the board. So the top rate would be reduced from 35 percent to the 28 percent originally established in the Reagan tax reform. The bottom tax rates, paid by working people and the middle class, would be reduced to 8 percent and 12 percent — even lower than under Reagan.
• Completely eliminate federal income taxes on long-term capital gains, dividends, and interest income for workers earning less than $100,000 and married couples earning less than $200,000.
• Reduce the federal corporate tax rate from 35 percent to a more internationally competitive 25 percent, close to the global average, which would restore international competitiveness for American business. That rate would be reduced further in conjunction with broader corporate tax reform to close the numerous and extensive loopholes.
• Allow a tax holiday for the repatriation of the trillions in profits that corporations have parked overseas to avoid the double taxation they face in bringing the money back to America. Over the long run he would eliminate that double taxation by adopting a system of territoriality, so taxes apply to corporate profits only in the country where those profits are earned. Romney also proposes to make the federal research and development tax credit permanent.
The central theme is actually to cut taxes on the middle class, multiple times, over and over. Romney nowhere proposes any tax increase on the middle class, or on anyone else for that matter. Obama’s allegation that Romney would raise taxes on the middle class by $2,000 per family is a complete fabrication. Obama did the same thing to Ryan’s budget plan, alleging a litany of supposed cuts that were nowhere to be found in the plan. Obama just made them up well.
Even the Tax Policy Center study that Obama cites for his charge says that Romney “promises that low- and middle-income households will pay no larger shares of federal taxes than they do now.” The study argues that in order to raise the same amount of money, the federal government would have to raise taxes on middle- and lower-class families — but it does not suggest that any such thing has been proposed by Romney. In addition, the study fails to give nearly adequate credit to the fact that Romney’s tax plan will increase economic growth and jobs — and thus, tax revenue. Reagan cut overall tax rates by far more than Romney is proposing, and during the 1980s, federal revenue doubled.
The bottom line is that Obama is disgracefully campaigning as a damn liar, to the great shame of the entire Democrat Party that he represents. It is old-fashioned Soviet propaganda to publicly campaign on the opposite of the truth, as Obama is doing. That reflects Obama’s Marxist upbringing and the nature of today’s Che Guevara Democrat Party.