Romney’s $5 Trillion Tax Dodge

If you watched Wednesday night’s presidential debate you witnessed an amazing role reversal for a modern Republican. President Obama accused Mitt Romney of wanting to cut taxes — specifically by $5 trillion — and Mitt Romney claimed he’d be strongly opposed to such a terrible idea.

A Republican, opposed to a giant tax cut? Here he is in his own words.

“I don’t have a $5 trillion tax cut. … I’m not looking for a $5 trillion tax cut. … Let me repeat what I said. I’m not in favor of a $5 trillion tax cut. That’s not my plan.”Romney’s objection is that the $5 trillion tax cut is only one half of his plan. But crucially, it’s the only part of his plan that he’s detailed with any specificity.

The $5 trillion from the nonpartisan, independent, Tax Policy Center. It’s an estimate of how much cutting everyone’s tax rates 20 percent below where they are right now would add to deficits over 10 years. That gross tax cut figure is not in dispute. Romney’s complaint is that it only accounts for one big piece of his tax plan. But what’s still unclear, perhaps more unclear after the debate, is the other big piece: how Romney plans to pay for it.

“[T]he governor repeated his vow that his tax rate cuts would not add to the deficit,” tax expert Howard Gleckman wrote on TPC’s blog after the debate. “And he said high-income households would pay the same share of taxes as they do today. And middle-income people would pay less. So, how will he finance the rate cuts? The poor could pay more, I suppose, though that’s unlikely. The only other solution: The tax cuts would have to pay for themselves by generating a huge increase in economic growth. But these big supply-side effects are implausible at best.”

Romney’s explanation of this at the debate mixed a pinch of supply-side fairy dust with a healthy dollop of “because I say so,” and zero part specificity.

“[I]n order for us not to lose revenue, have the government run out of money, I also lower deductions and credits and exemptions so that we keep taking in the same money when you also account for growth,” Romney said, emphasis added. “What I’ve said is I won’t put in place a tax cut that adds to the deficit. That’s part one. So there’s no economist can say Mitt Romney’s tax plan adds 5 trillion (dollars) if I say I will not add to the deficit with my tax plan.”

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