Since the Romney campaign likes to cite blog posts written by campaign staffers as legitimate studies I have decided to author my own study on his plan.
We have a very complicated TAX CODE, nobody will deny that, and yes it does need to be reformed if we are going to succeed as a nation. President Obama's tax plan is amusing, but Gov. Romney's plan is a joke. In order to fix our debt crisis serious things have to be done. Sorry Mr. Norquist but what I am about to right will probably cause you to have a seizure.
In order to fix our debt crisis lets take a look at how it all started. First off the United States has always been a nation with a debt. In 1791 the National Debt was $75.4 Million dollars. The lowest debt that the nation has ever had was in 1835 when the debt was only $33,733.00, mind you in 1835 the United States was only 24 States.
Lets fast forward to where our current debt crisis began, in 1981 the Nation just elected an Actor and the future conservative God of the Republican Party, Ronald Reagan. The National Debt on Jan 1 1981 was $997.8 Billion. Our tax brackets were considerably different than they are today. Instead of having the six tax brackets that we have today we had 16 different brackets ranging from 0% to 70% Marginal Tax Rates.
In 1989 when VP George H.W. Bush took office the National Debt was $2.7 trillion and only had 2 tax brackets 15 and 28%. Obviously the changes to our tax code that occurred during the 1980's are responsible for the ballooning of the debt.
In 1993 we the Nation elected Bill Clinton to be the 42nd President of the United States. When President Clinton took office in 1993 the National Debt was $4.3 trillion, and we had three tax brackets 15, 28, and 31%, President Clinton again changed the tax code creating a system similar in bracket style to what we have today 5 different brackets, in addition to the previous brackets he added 36% and a 39% marginal tax rates.
When George W. Bush assumed the job of President on Jan 20, 2001 the National Debt was $5.7 trillion meaning under the 8 years of President Clinton the Debt saw its slowest growth in more than a decade, in 8 years it rose $1.4 trillion. President Bush lowered taxes in 2001 to rates of 10, 15, 27, 30, 35, 38.6%, then again in lower them in 2003 to rates of 10, 15, 27, 30, 33, 35. Mind you the National Debt had already increased by more than $1 trillion between the 2001 and 2003 tax cuts.
In 2009 President Obama took office with a debt of $11 trillion dollars. Same tax rates that were last implemented in 2003, with the top tax bracket being 35% for people making incomes over $379,000. To this day the marginal tax rates have not changed since 2003, yet our national debt has ballooned to over $16 trillion
Now we have a candidate running for President he has a plan to reduce tax rates by 20% across the board. So under the Romney Plan the Marginal Tax Rates will be.
8%
12%
21.6%
24%
26.4%
28%
In addition to lowering the Marginal tax rates he is also promising to eliminate the Interest, Dividend, and Capital Gains Tax rates for people with an adjusted Gross Income of $200,000 or less. He is promising to eliminate the estate tax, and to repeal the alternative minimum tax. He is also promising to cut the corporate tax rate from 35% to 25%.
Over the course of two Presidential Debates Romney has claimed that his plan will be deficit neutral, meaning that it is paid for, and that it will notcause the middle class to pay more in taxes. Well according to the Tax Policy Center the Cuts will cost around $4.8 trillion over the next decade so $480 billion a year. He will not explain how he will get to that, he says he will close loop holes and deductions.
In the 2nd Debate Gov. Romney stated that he has done the math and his plan will work, then he went off to explain his idea of making deduction buckets, yet he could not give a specific rate instead his answer was, "in terms of bringing down deductions, one way of doing that would be say everybody gets - I'll pick a number - $25,000 of deductions and credits, and you can decide which ones to use."
If your picking a number out of your head Gov. Romney then you have not done the math, and there is no way that the mat can work.
On a side note to that in his 2011 Tax Returns Gov. Romney claimed $2.25 million in deductions, and according to his accountants that was less than he could have claimed. By Romney's plan the wealthy will pay a lot more in taxes, if he is limited to only $25K in deductions, he would have paid the IRS more than $2 million in taxes. There is absolutely no possible way that Congress would ever pass something like that, the House and a third of the Senate face re-elction every two years and if they just raised the taxes of their wealthy donors by millions of dollars they would lose, and if they cause the middle class to pay more in taxes, the voting base will crucify them.