On “60 Minutes” last night, Mitt Romney said it again. “I want to keep the current progressivity in the code. There should be no tax reduction for high income people.”
You’ve heard Romney say this — or some variant of it –dozens of times before. What’s changed since then is that Romney has admitted that his tax cuts, if they’re not going to add to the deficit, will have to increase taxes on people he defines as middle income and cut them on people he defines as high income.
Before we get to that admission, a quick refresher. Romney’s tax plan proposes to cut tax rates by 20 percent. That would cost trillions of dollars, and mean a particularly big tax cut for the rich.
But Romney promises his tax cut won’t cost anything, won’t raise taxes on the middle class, won’t cut taxes on the rich, and won’t end the tax breaks for savings and investment.
The Tax Policy Center, the gold standard in nonpartisan tax wonkery, looked at the tax cut and these promises and declared the proposal “not mathematically possible.” Since Romney doesn’t want to touch tax breaks for savings and investment like the capital gains cut — a position he reiterated last night on “60 Minutes” — there just isn’t enough money in the remaining tax breaks for people making over $250,000 to pay for their tax cuts.
For awhile, the Romney campaign had no answer to this. They just said they didn’t believe the Tax Policy Center — called it biased, even though it’s run by one of George W. Bush’s top economists.
Then, slowly, right-leaning economists and outlets began releasing their own studies showing that, if you made some really, really questionable assumptions, you could kinda sorta make Romney’s math look like it might add up. And so you might have heard Romney say this to David Gregory on “Meet the Press”:
The good news is that five different economic studies, including one at Harvard and Princeton and AEI and a couple at The Wall Street Journal all show that if we bring down our top rates and actually go across the board, bring down rates for everyone in America, but also limit deductions and exemptions for people at the high end, while you can keep the progressivity in the code, you could remain revenue neutral and you create an enormous incentive for growth in the economy.
The Harvard study was done by economist Martin Feldstein, and he makes a very important decision in his paper. He writes, “I think it is very reasonable to say that people in that high-income group” — by which means people making over $100,000 — “are not the ‘middle class.’”
And so, under really, really unrealistic assumptions, he shows that the math can kind of work, but that Romney’s policies would mean a really big tax increase for people making between $100,000 and $250,000 in order to pay for a big tax cut on people making more than $250,000. But that’s okay, because people making over $100,000 are not in the middle class.
And Romney has been all over the place trumpeting this study, saying this study shows his math works out. But then ABC’s George Stephanopoulos caught him out:
GEORGE STEPHANOPOULOS: Is $100,000 middle income?
MITT ROMNEY: No, middle income is $200,000 to $250,000 and less.
For the record, I’m actually with Feldstein on this one: I think it’s reasonable to say households making more than $100,000 are not middle income. But Romney disagrees with me, and with Feldstein.
So the study Romney is promoting — the one he says is the study you should be looking at — actually shows even under the most favorable assumptions possible, he’s going to have to raise taxes on the people he defines as the middle class. In saying that that study is credible, he has admitted he can’t make his tax promises add up. And yet he constantly, repeatedly says the opposite.
Romney has clearly calculated that there aren’t many people who read these analyses. If he just keeps saying his tax plan can cut taxes on the rich while cutting taxes on the middle class while not cutting taxes on the rich while not costing a dime, eventually, his version of this will come to be seen as the truth. And perhaps he’s right. But the numbers show what they show.