Mitt Romney’s campaign fiercely defended his tax plan Thursday, a day after an independent study concluded it would offer big tax cuts to wealthy Americans while heavying the burden on middle- and lower-class families.
On a conference call with reporters, Romney advisers ripped the study—conducted by the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute—as “biased” and “a joke.”
“The study doesn’t take into account important aspects of Governor Romney’s plan, which will have a positive, pro-growth impact on the economy,” senior adviser Eric Fehrnstrom said.
Kevin Hassett, an economic adviser, contended Romney’s plan to lower income tax rates for people at all income levels would boost the nation’s economic growth by about 1 percentage point per year.
Hassett also cited a University of Chicago study that suggested uncertainty about looming spending cuts and the fate of Bush-era tax cuts—scheduled to expire at the end of the year—may be stunting economic growth.
President Obama has proposed extending the Bush tax cuts only for households that earn $250,000 or less per year, effectively raising taxes on higher earners. Romney’s plan would extend the tax cuts for all Americans.
The stability of an across-the-board extension—along with Romney’s 20-percent reduction of all income tax rates and his cutting of the corporate tax rate to 25 percent—make it “very easy to justify job creation [estimates] of 5 to 10 million higher than baseline over a decade,” Hassett argued.
More jobs means a broader tax base. More people paying taxes helps to offset the revenue lost to lower rates, Hassett said.
But a broader tax base will not fully compensate for Romney’s tax rate reductions, his campaign conceded.
In an e-mail after the conference call, Romney spokeswoman Andrea Saul said “we are not proposing to ensure revenue neutrality solely through base broadening.”
A chief criticism of Romney’s tax plan is that it does not reveal the additional measures he would take to maintain current tax revenues, which he has pledged to do.
The Tax Policy Center concluded that to achieve revenue neutrality, Romney would have to curtail many tax benefits currently enjoyed by middle- and lower-class households, including the mortgage interest deduction, the exclusion for employer-provided health insurance, the deduction for charitable contributions, the earned income tax credit and the child tax credit.
Without these benefits, the study said, middle- and lower-class taxpayers would be subjected to a net tax increase, even though their personal income tax rates would be lower.
Fehrnstrom sought to discredit the report, noting that one of its authors, Adam Looney, served on President Obama’s Council of Economic Advisers.
But a second author, William Gale, was a member of George H. W. Bush’s economic council, and the Tax Policy Center’s director, Donald Marron, was a member of George W. Bush’s.
Talking Points Memo noted Wednesday that in November, when the Tax Policy Center criticized a tax plan by Texas Governor Rick Perry, one of Romney’s primary opponents, the Romney campaign referred to the center’s report as “objective, third-party analysis.”
On the conference call, Romney advisers did not address the benefit reductions cited in the latest Tax Policy Center study; after the call, the campaign did not respond to questions about whether he would lessen or eliminate the benefits.
Jonathan Burks, Romney’s deputy policy director, told reporters that the tax plan is a framework.
“The governor’s plan essentially lays out the parameters of what he wants to achieve—lowering tax rates by 20 percent, achieving revenue neutrality and maintaining progressivity—and within that, he would write a tax bill that achieves those goals,” Burks said. “And so it’s not a question of today, you know, we’ve got a 2,000-page tax plan that could be scored and demonstrate this. It’s that the governor has laid out a tax program; he’s laid out goals that are accomplishable.”
“The details of how that would be accomplished are things that would have to be worked out with Congress,” Burks added.