Mitt Romney's Tax Plan Is Great... For Mitt Romney

September 07, 2011 3:28 pm ET — Jamison Foser

Give Mitt Romney this much credit: At least his economic plan is clear about who he'd help. The tax policy section of Romney's plan spells out in six steps an agenda that consistently favors the wealthy and large corporations, while doing relatively little for working-class Americans who most need help and who would be most likely to stimulate the economy by spending any additional money they come across. Here's a quick look at the key elements of Romney's plan, and who they would benefit:

"Maintain Low Marginal Rates"

Current marginal rates are far more favorable for massively rich people like Mitt Romney than they have at almost any other time in the past century. But Romney thinks that, if anything, marginal rates should be lower (which is to say, even more favorable for massively rich people like Mitt Romney): "If anything, the lower rates established by President Bush should be regarded as a directional marker on the road to more fundamental reform."

"Further Reduce Taxes on Savings and Investment"

Romney's plan explains: "Romney will seek to eliminate taxation on capital gains, dividends, and interest for any taxpayer with an adjusted gross income of under $200,000, helping Americans to prepare for retirement and enjoy the freedom that accompanies financial security."

That's good news for people who have significant capital gains, dividends, and interest earnings. But only about 11 percent of Americans who make less than $200,000 pay any capital gains tax. Unemployed people, single parents working two jobs, people struggling to get by on low, stagnant wages — the people most likely to need extra money, and most likely to stimulate the economy by spending it — don't tend to enjoy capital gains or dividends. So the only portion of Romney's tax plan that is targeted to people who make less than $200,000 a year is targeted to the most fortunate of those people. Even when Romney tries to portray himself as a friend of the common man, he can only bring himself to help the most uncommon of them.

"Eliminate the Death Tax"

The estate tax only applies to estates in excess of $5 million, so eliminating it is great for people — like Mitt Romney — who are fortunate enough to come from a wealthy family, but not so good for the majority of Americans who will never be affected by it, but who must now make up for the lost revenue via higher taxes or reduced government services.

"Long-Term Goal: Pursue a Fairer, Flatter, Simpler Tax Structure"

Romney's plan explains: "Mitt Romney will pursue a conservative overhaul of the tax system that includes lower and flatter rates on a broader tax base. ... Where reforms that simplify the code or encourage growth have the effect of increasing the tax burden, they should be offset by reductions in marginal rates."

Flattening tax rates generally benefits rich people like Mitt Romney at the expense of everyone else. And just in case simplifying the tax code accidentally ends up causing Warren Buffett to start paying a higher tax rate than his secretary, Romney promises to reduce marginal rates to make sure Buffett's tax burden doesn't increase.

"Lower the Corporate Tax Rate"

Noteworthy: While Romney's plan notes that America's "top marginal rate of 35 percent ... vies for the developed world's highest," it doesn't mention that the effective corporate tax rate in the U.S. is lower than that of several other nations. Even more noteworthy: Romney's promise to "press for an immediate reduction of the corporate tax rate from 35 to 25 percent" is not accompanied by the typical conservative rhetoric about eliminating loopholes so revenue stays constant. In other words: He's just giving corporations that are already rolling in (and sitting on) money a huge tax cut.

That's twice that Romney shunned the typical Republican framing of "eliminate tax loopholes so we can cut rates while keeping revenues constant" and instead embraced tax reductions for the rich and big corporations without making up for the lost revenue by closing loopholes.

"Transition to a "Territorial" Tax System"

Romney's plan acknowledges "Complex technical issues will arise during the transition: amendments to the tax code need to be crafted in a way that does not encourage corporations to game the system and export jobs or to move their U.S. headquarters abroad. With proper draftsmanship, these potential hazards can be overcome." Let's hope that's true, because as Citizens For Tax Justice notes, under a territorial system "corporations would have a greater incentive to engage in profit-shifting, meaning practices used to disguise U.S. profits as foreign profits" and "corporations would have a greater incentive to shift actual operations — and jobs — to other countries."  

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