Mitt Romney’s policy director Lanhee Chen claims that a new study showing 95% of Americans would see a tax hike under Romney’s tax reform plan is “biased” and fails to take into account the explosion of economic growth that will occur under Romney’s administration.
“This is just another biased study from a former Obama staffer that ignores critical parts of Governor Romney’s tax reform program, which will help the middle class and promote faster economic growth,” Chen wrote in a statement Monday evening in response to the study by the Tax Policy Center released earlier in the day.
“The study analyzes only half of Governor Romney’s tax program, ignoring the reforms that would make America’s corporations more competitive by moving from the highest corporate tax rate in the industrialized world to one that is comparable to our trading partners. And the study ignores the positive benefits to economic growth from both the corporate tax plan and the deficit reduction called for in the Romney plan. These glaring gaps invalidate the report’s conclusions.”
As noted by Chen, one of the study’s co-authors, Adam Looney, is a former economic adviser to Obama. Another co-author, however, sat on George H.W. Bush’s Council of Economic Advisers. The Tax Poice Center is a join project of the Urban Institute and Brookings Institution, which are independent and non-partisan but generally considered left of center. In the past, Romney’s own campaign has often referred to the same group’s findings when they’ve evaluated his Republican opponents’ policies, in one press release describing the Tax Policy Center as an “objective, third-party analysis.”
Chen’s latter point, the campaign’s first substantive response to the study itself, suggests that the report is unfair because it refuses to take into account a hypothetical economic boom that will take place once Romney implements his policies. Conservative blogger James Pethokoukis, at the American Enterprise Institute, while suggesting the Tax Policy Center’s evaluation was at its heart fair, offered up a similar critique. The idea is that Romney, by also cutting corporate tax rates in a revenue neutral fashion, will usher in a golden age of business expansion. Nonpartisan analysts have been highly skeptical of this claim, especially since Romney’s additional promises to rapidly cut spending are likely to slow the economy in the short term.
Apparently anticipating similar criticism from the right, the Tax Policy Center decided to humor them by including an alternate analysis in its study in which it assumed that Romney turns out to be correct and his tax proposals produce unexpected floods of new revenue. However, even that generous concession didn’t change its analysis.
“Although reasonable models would show that these tax changes would have little effect on growth, we show that even with implausibly large growth effects, revenue neutrality would still require large reductions in tax expenditures and would likely result in a net tax increase for lower- and middle-income households and tax cuts for high-income households,” the study concluded.
Romney’s campaign is hampered in their efforts to debate the study on the merits because they have yet to offer up details of how they would pay for their proposed tax cuts. Without that information, they don’t have much to offer to rebut suggestions that keeping his tax reforms revenue neutral will require major cuts to tax breaks that disproportionately benefit middle and low income families.
