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When it comes to tax plans, it’s all just so confusing. Or at least that’s what the NYT< seems to be telling us.
Setting the record straight on the effects of 2 tax plans (Photo: 401k / Flickr)
The NYT ran an article that reports on a study by the Tax Policy Center that showed Governor Romney’s tax plan would lead to a large reduction in taxes for the wealthy, while raising taxes for everyone else. It then cites Romney’s claim that his tax plan is similar to the one developed by Morgan Stanley director Erskine Bowles and former Senator Alan Simpson, the co-chairs of President Obama’s deficit commission. The piece goes on to tell readers:
The Simpson-Bowles plan called for reduced income tax rates, but it would have raised about $2 trillion more in tax revenues over 10 years, mostly from high-income taxpayers.
Wow, this should really leave us scratching our heads. After all, if Romney’s plan is similar to the Bowles-Simpson plan, and the Bowles-Simpson plan would raise $2 trillion, mostly from high income taxpayers, then the Romney plan must also increase revenue from high income taxpayers. But, then the Tax Policy Center study would be wrong. What is a careful NYT reader to think?
The NYT could have resolved this seeming paradox by pointing out an important difference between the Romney plan and the Bowles-Simpson plan. Romney has explicitly said that he would not change any of the tax incentives for saving. This means that he has ruled out raising the tax rate on capital gains and dividends or curtailing some of the tax benefits for IRAs and 401(k)s. This makes his plan much more friendly to upper income taxpayers, who are the primary beneficiaries of these tax breaks.
Perhaps the NYT assumed that all its readers already knew about this difference between the Romney plan and the Bowles-Simpson plan, but it still have been worth reminding them.
Dean Baker is co-director of the Center for Economy and Policy Research. He also writes a regular blog,Beat the Press, where this post original appeared.
17 Comments
Whether or not Romney is similar to, or different from the recommendations of the Simpson Bowles Commission, sometimes referred to as the Cat Food Commission, is not at all important to me.
A presidential candidate’s being deceptive is, however important to me, be it via outright lie, or half truth, or failure to disclose or failure to clarify.
I would note as well that laws Laws do not have to blunt instruments. They can make distinctions.
Laws easily tax income from savings differently than they tax income from other investments, such as stock.
Additionally, income from any source to very, very wealthy people can obviously be taxed differently from income to people who are struggling.
So, refusal to penalize people for saving does not really seem to me to the issue. So, that is another area of deception.
Sadly, deception seems to be a recurring theme.
Everyone–
Please take a moment to listen to, and/or read the transcript of this NPR clip (only 4 minutes 15 seconds) of President Obama endorsing the “Gang of Six” proposal in a press conference. (Please do listen–away from my own computer, had to stop “at the library” to post this comment.)
It is important to hear this clip, because the Gang’s “plan” is the Bowles-Simpson catfood commission proposal, put in legislative language. We know this, because Senators Warner and Chambliss have repeatedly stated as much.
This audio clip is a bit dated, but anyone who is paying attention knows that O has dropped the “austerity rhetoric” only because he is in campaign mode. As soon as the election is over, if he is elected, we will see legislation, OR the framework of legislation, that reads very much like Bowles-Simpson or the Gang of Six proposals. Former Senator Judd Gregg told reporters this, on July 19, 2012, at the kickoff of the “Campaign to Fix the Debt.” If it is only a framework, it will have a “trigger mechanism” (which of course is just what the Super Committee did, when they set up the “sequestration cuts.”)
And don’t be duped by those who would tell you, that it’s only those “dastardly Republicans” who intend to implement draconian “entitlement and tax reform” measures.
Jeez Louise! All this talk about Romney’s tax plan, is just a distraction. “It is a difference, without a distinction,” or, with VERY LITTLE distinction.
LINK TO NPR PRESS CONFERENCE WITH PRESIDENT OBAMA ENDORSING ‘THE GANG OF SIX’ (Bowles-Simpson Plan):
http://www.npr.org/2011/07/19/138519989/obama-endorses-gang-of-six-plan
In addition, here is another hideous aspect of the Bowles-Simpson (Gang of Six reform)–The Enhanced Mimimum Benefit for Low Income Workers.
Here’s an excerpt from the Center from Budget and Policy Priorities’ (CBPP) analysis of the B-S “enhanced benefit” reform.
“It (the enhanced minimum benefit) could actually harm some beneficiaries . Some people who qualify for the minimum benefit would otherwise have collected Supplemental Security Income (SSI), a means-tested benefit that aids elderly or disabled people with little income and few assets. SSI benefits equal about three-fourths of the poverty line. Crucially, SSI eligibility also confers Medicaid coverage. Boosting these beneficiaries’ Social Security income may disqualify them from SSI — and hence from Medicaid, which can have a calamitous effect if they have high health-care expenses that are not covered by Medicare. Any proposal to establish a minimum benefit must be accompanied by an adjustment in SSI and Medicaid eligibility rules to avoid making many poor beneficiaries worse off. Bowles-Simpson, however, includes no such an adjustment.”
Please, everyone, call your representatives today, and tell them that the Bowles-Simpson, Gang of Six, etc., plans are simply not acceptable. Time is running out.
Thanks.
Blue
It is definitely on the agenda for right after the election. This is from The Hill.
Deficit Plan to be unveiled on Day After the November Election.
Every time I have written the NY Times reporters pointing this out in any number of cases from the health care debate to the debt debate — and specifically stating that their article is a he said, she said, they always respond that their readers are informed enough that they don’t need to point out the obvious. I always email back “that is why these lies can proliferate — because you and the general media don’t point out the obvious”. Seems to me the paper of record should not have to be told this.
For those who want to cut through the paper chase and compare the cuts to Social Programs of the Bowles-Simpson, Rivlin-Domenici, and the House Congressional cuts, here is a chart from the Alliance of Retired Americans:
Link to Chart.
There are already 401K caps under existing tax law – tax law already taxes 1%ers. Lowering the caps with the Catfood Commission only makes the tax more regressive, not less regressive because more people will fall under it…the Catfood Commission captures more 99%ers, not 1%ers. Raising taxes on 401K contributions would hurt people who need to save for retirement. All this being said, capital gains/dividends are a completely different animals and yeah, raise taxes on that.
Tom–
THANK YOU.
I saw Dean’s article on a cell phone that is NOT user friendly for typing text, so stopped in at the local library. Was just was about to leave, when I glanced at the MyFDL front page, and saw and read Wendy’s diary, and then your comment.
You must be a mind reader! I can’t stay here to keep reading and typing, but “By George, I was going to head back here, and link to the Hill article. But, you beat me to it. LOL! Hey, okay with me.”
Seriously, thank you so much for this article. Mr. Blue and I will be on a project, that will have us “off grid” for DSL, that is, for next 7-10 days.
But, I leave comforted to know that you are ever “vigilant” when it comes to preserving the social safety net, and informing folks about the serious austerity measures that are coming down the pike. It is going to be stressful to keep reading about this issue, with no way to “get on the boards,” for a while.
Can’t believe the package is for 5 Trillion Dollars! Heaven Help Us All.
Thanks, again.
Blue
The sad thing is, whoever wins will interpret it as their “mandate” to do this. (Because neither Obama nor Romney are disavowing things such as these).
-stewartm
Stewartm, both candidates have been bragging about whose deficit cutting plan is ‘best’, the Obama 4 trillion in tax reform and spending cuts or the Romney 5 trillion in deficit reduction. All Dean Baker is pointing out is Romney’s hypocrisy as he won’t hurt the 1%. However, what Dean does not address (probably because that is not the focus of his post) is that Bowles-Simpson’s cuts are not just cuts removing middle class tax breaks like the mortgage deduction, but program cuts to essential social programs. The Public does not appear to be concerned about ‘the deficit’ although they are being propagandized about it through the mass media. They (the Public) should realize that both candidates are going to hurt them in the pocketbook. This is a non-crisis which is being fabricated in order to reduce Social Security, Medicare, and Medicaid.
http://www.retiredamericans.org/system/storage/24/81/1/1596/Fact_Sheet_2012_Deficit_Reduction_Plans_Threaten_Programs_FINAL.pdf
Can we please not treat B-S as a serious proposal.
Tom–
Back on Blackberry—so short!
I dismiss capital gains tax difference because B-S broadens the base SO MUCH and raises taxes great deal on lower and middle income folks by eliminating tax deductions.
Add that to massive cuts to social programs, cap gains tax cut doesn’t mean a plug nickel (to me).
BTW, the tone of this article dies sound like a defense of B-S, to my ears. Maybe I’m wrong.
Blue
“Does sound” obviously.
Blue
Is this serious enough for you??
“And Rep. Rob Andrews (D-N.J.) declined to question the witnesses, saying instead that “the answer to sequestration lies on our side of the table, not yours.”
He did, however, list federal programs, including Medicare and Social Security, that he said he’d be willing to cut to reach a deficit-reduction compromise with his Republican colleagues.
“The roof did not cave in on my head when I said this,” he said. “It’s time for us to start saying what we’re for, not what we’re against.”
Read more:
Dean Baker is solidly against cuts to Social Security and against vouchers instead of Medicare and higher copays. In this current piece, he is just fine tuning Romney’s position on taxes. Dean is forcing a comparison.
He just put this out and it is very sympathetic to Social Security’s cause.
Take heart, Blue.
Guess I’m getting a little too distrustful of all mainstream writers.
My apology to Dr Baker. Wish you would explain how harmful “means testing” would be.
Blue
I know that Dean is definitely one of the “Good Guys”, as well as just being a good guy, generally.
But I too have developed a reflex mechanism where any criticism of Romney just gets a big “I don’t give a funk” from me. Because criticism of Romney always implicitly carries approval for Obama. Look at the current piece; Dean criticizes Romney for not being as raising tax rates the way the Catfood Commission plan would. But nowhere does he mention that the Catfood Commission plan is vile and evil and conforming to it should not be a goal of any public-service-minded person. This reads as though Dean is endorsing the Catfood Commission plan, despite the fact that his longtime readers know that he most emphatically does not.
Calling out Romney as a hypocrite seems to be the very definition of not seeing the forest for the trees, IMO. I don’t care if Romney is “worse” than Obama; I care that Obama’s economics, wars, and murders of American citizens are being defined as the “lesser” of the two evils.
Romney could spend his days walking into walls, speaking in tongues and using the Constitution for toilet paper and I really wouldn’t care. He’s not remotely the problem and he’s not remotely of interest. JMO.
I share your revulsion: the bashing one fraud is cheering the other fraud reflux disorder!