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Mitt’s Magic Math (Or: Math Is Hard.)

September 26, 2012

Tell me if you can spot the problem here:

“I want to keep the current progressivity in the code,” Romney told CBS’ “60 Minutes” Sunday. “There should be no tax reduction for high income people. What I would like to do is to get a tax reduction for middle-income families by eliminating the tax for middle-income families on interest, dividends, and capital gains.” (Talking Points Memo)

Where to begin? Romney has said he wants to reduce income taxes by 20% and get the top rate down from the 35% it is currently to 28%. Now if that sounds to you like a “tax reduction for high income people”, you’re forgetting all the loopholes Mitt plans to close! Such as …well…actually, he won’t say. But trust him.  And while eliminating taxes on investment income for the middle class sounds nice, a cynic might say it sounds more like a diversion to make the low rate for high income payers look more palatable — people such as Mitt himself (he of the 14% tax rate.)

Ever wonder why Mitt is constantly being asked to name the loopholes he would close to offset his massive tax cuts on the wealthy and still remain revenue neutral? It’s because there simply isn’t enough money in all the tax loopholes for top tax brackets to make the math work. “Perks that benefit middle income earners like the mortgage interest deduction, and deductability of employer-based health insurance, charitable giving and state and local taxes would need to be limited or eliminated.”

But the biggest problem of all for Mitt is his claim that his plan will not raise taxes on the middle class. And we know that Mitt Romney believes “Middle income is $200,000 to $250,000 and less.” Mitt’s got a problem with his math.

Economists (most notably the Tax Policy Center) have looked at the Romney plan (which he says can’t be scored because he leaves so many things blank) and found it to be “mathematically impossible”.  See here, here, and here. Conservative economists have tried to finagle the numbers — Harvard professor Martin Feldstein made a tortured attempt only to end up validating the very TPC findings he wished to refute, “arguing that the targets could be met if “middle class” is defined downward — specifically if Romney increases the tax burden on incomes between $100,000 and $250,000 to pay for tax rate cuts for everyone else.”

Funny thing about that Feldstein analysis: Mitt likes to say that economists back his plan. But the truth is that for Feldstein’s findings to hold for Romney, he has to either redefine middle class or admit that he’d be raising middle class taxes. Oops.

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