Romney’s tax plan is predicated on the assumption that a high percentage of job creators pay taxes at the highest personal rate, because they are the only ones who get tax relief according to the latest incarnation of the plan. Yet the theory behind his tax plan is that high rates are a disincentive to job creation. If paying high rates is such a disincentive, then why are so many job creators paying at the highest rates?
If for argument sake, we go along with the argument that Romney makes, that his tax plan will be revenue neutral. And that it will actually effectively raise the rates of many higher income Americans by eliminating loopholes and deductions, and that the only upper income Americans who will benefit are the ones who pay the highest rates, because they are the job creators, then we are essentially saying that the many of the job creators are the Americans who are paying the highest rates. But this essentially undermines the argument that high taxes are a disincentive to job creation. If that were the case, there would be very few job creators paying those high rates.
How many times do we need to say the only real spurs to job creation are demand and targeted stimulus? Tax policies can have an effect at the margins, but they are not drivers. Companies are in the business of making money, not creating jobs. And if a job they create makes the company more money, then it makes sense to create that job regardless of the tax rate. Putting money in the economy can spur demand, but not by putting it in the hands of the wealthiest Americans. That is the least effective form of stimulus.
Now we all know Romney’s tax plan is really just another redistribution of this country’s wealth to the wealthiest among us. But that’s not its greatest weakness. Its greatest weakness is it makes no sense, it is not internally consistent. It is based on the assumption that high tax rates are the major disincentive to job creation, but in order do be successful it requires that the biggest job creators are the ones who pay the highest rates.