Study: Romney plan raises taxes on poor families (AP)

WASHINGTON – Republican Mitt Romney's tax plan would increase taxes on low-income families while cutting taxes for the middle-class and the rich, according to an independent study released Thursday.

On average, households making less than $20,000 would see their taxes increase by more than 60 percent, said the Tax Policy Center, a Washington research group that studied the Romney plan.

Households making between $50,000 and $75,000 would get small tax cuts, averaging 2.2 percent, or about $250, the study said. People making more than $1 million would get tax cuts averaging 15 percent, or about $146,000.

"Virtually everybody with a big income is getting a tax cut," said Roberton Williams, a senior fellow at the Tax Policy Center.

Overall, Romney's plan would reduce tax revenues by $180 billion in 2015, adding to the federal budget deficit, the study said. Romney's campaign disputes the estimate, saying tax cuts in the plan would help improve the economy, leading to more revenue.

Fresh off a slim victory in the Iowa caucuses, Romney is the front-runner for the GOP nomination for president. His tax plan is less sweeping than those proposed by some of his rivals. He says he will push for "a fundamental redesign of our system." But initially, his plan maintains the current tax rates while cutting corporate taxes and reducing taxes on investments.

Romney's plan would cut the top corporate tax rate form 35 percent to 25 percent, eliminate investment taxes for the middle class and make permanent a massive package of tax cuts first enacted under President George W. Bush.

Romney would also repeal tax increases on the wealthy that were enacted as part of President Barack Obama's health care package. His plan, however, would allow some tax cuts enacted under Obama to expire.

The Obama tax cuts, first enacted as part of the massive economic stimulus package passed in 2009, targeted low-income families with children, including many people who don't make enough money to pay any federal income taxes. They included an expanded tax credit for college students, a more generous Earned Income Tax Credit for families with three or more children, and a more generous child tax credit for low-income families.

Like the Bush tax cuts, the Obama tax cuts are scheduled to expire at the end of the year. Romney's campaign says letting the Obama tax cuts expire doesn't amount to a tax increase.

"Mitt Romney has not proposed raising taxes. In fact, he laid out a blueprint for governing that includes dramatic spending cuts to reduce the deficit and pro-growth tax policies that permanently extend the Bush tax cuts, dramatically cut the corporate tax rate to create jobs, and deliver real tax relief to middle-income taxpayers," campaign spokeswoman Andrea Saul said.

Other GOP candidates have called for more sweeping tax plans. Former House Speaker Newt Gingrich and Texas Gov. Rick Perry have both called for versions of the flat tax, in which all income is taxed at the same rate. Former Sen. Rick Santorum of Pennsylvania has called for reducing the number of tax brackets from six to two.

Previous studies by the Tax Policy Center have found that plans by Gingrich and Perry would result in big tax cuts for the wealthy, reducing tax revenue by billions each year. The center has not yet done a comprehensive analysis of Santorum's plan, though Williams said one is planned.

The Tax Policy Center is a research group formed by two Washington think tanks, the Urban Institute and the Brookings Institution. Its researchers regularly testify before Congress on tax policy and its analyses during the 2008 presidential campaign were widely circulated.

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Cracks in GOP promise of no new taxes for deficit cuts? (The Christian Science Monitor)

Washington – As Congress hurtles toward a self-imposed deadline to cut at least $1.2 trillion from deficits during the next 10 years, conservative lawmakers face tough choices on whether to keep their pledge to never raise taxes.

All six GOP members of the Joint Committee on Deficit Reduction have signed the taxpayer protection pledge, launched in 1986 by Americans for Tax Reform (ATR), an antitax group. All but six House Republicans and seven US senators have also signed.

The pledge commits lawmakers to opposing any hikes in tax rates. It also opposes cutting tax breaks or loopholes, unless they are entirely offset by spending cuts or other tax breaks. The idea is to ensure that no new money goes to the federal government but instead remains in the wallets of taxpayers.

But that opposition to any net tax increase is emerging as a major obstacle to the deficit "super committee" reaching a deal by its Nov. 23 deadline. Democrats on the panel are committed to a “balanced” approach to deficit reduction, which includes increases to federal revenue, such as tax hikes on the highest-income Americans.

RECOMMENDED: Who's who on the deficit 'super committee'

Now there are signs that, even for some prominent conservatives, the constraints of the ATR pledge are beginning to chafe.

Rep. Paul Ryan (R) of Wisconsin, who chairs the House Budget Committee, lately is avoiding being forced to give a yes-or-no answer to questions on tax hikes. All GOP presidential hopefuls responded in a recent debate that they would oppose revenue increases as part of a deficit-reduction deal, even if the ratio was $1 in tax hikes for every $10 in spending cuts.

“I think that was more of a gotcha question and trying to get people to look like they violated some pledge they may have taken,” he said during an interview with National Public Radio’s “Morning Edition” on Friday. “I’m not going to play this game.”

“I believe you can get higher revenues through tax reform and economic growth, and I think that’s the way to do it, because you don’t want to compromise job creation,” he said.

Rep. Buck McKeon (R) of California, who chairs the House Armed Services Committee, is lobbying his colleagues hard to not accept further defense cuts as part of a deficit compromise. But he doesn’t want to be forced to choose between defense spending and a tax hike.

“I don’t want to get to that point,â€

Rep. Jeff Flake (R) of Arizona, who has signed the pledge, has suggested there is some wiggle room. “Some [conservatives] won’t even let you get rid of a tax deduction or tax expenditure, unless it matches up with a tax cut. I’m not one of those.”

“If you can get rid of something as bad as the ethanol subsidy, I don’t think we should feel compelled to find a corresponding tax cut,” he added.

ATR President Grover Norquist calls adherence to the pledge a principled stance and a commitment to voters, not to ATR or to himself. He predicts it will not break down in the heat of negotiations to reach a deal.

“All of the guys on that committee have taken the pledge and understand it,” he says. “Everything I’m hearing is that we’re fine.”

An anti-Norquist pledge petition, signed by more than 11,000 online responders, calls on "Gridlock Grover" to affirm that the constitutional oath of public officials should trump ATR's no-tax pledge. "Over the past several months, politicians across the political spectrum have argued that your demand for ideological purity and your strong-arm enforcement tactics are paralyzing Congress and preventing Congress from solving the problems of the American people," reads the petition sponsored by the Constitutional Accountability Center in Washington.

On Tuesday, Sen. Max Baucus (D) of Montana, chair of the Senate Finance Committee and a member of the deficit panel, proposed more than $1 trillion in tax increases in a $3 trillion deficit-reduction plan. GOP leaders on and off the panel quickly dismissed it.

“Democrats come up with phony proposals like the $3 trillion [plan] to mask tax increases,” says Mr. Norquist. “Democrats want to raise taxes and they don’t want to cut spending. Republicans don’t want to raise taxes, but they want to cut spending. That’s exactly what we want the narrative to be between now and the next election cycle.”

RECOMMENDED: Who's who on the deficit 'super committee'

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GOP rivals focus on flat taxes, smaller government (AP)

WASHINGTON – On jobs and taxes, the top Republican presidential rivals are locked in a fierce game of one-upmanship. They're all trying to outdo each other in offering the boldest economic plan for the campaign to unseat President Barack Obama next November.

Despite some notable differences in the blueprints, they all are built around the central theme that Obama's stimulus programs haven't worked and his job creation record is dismal. Example No. 1: Unemployment is holding at a painfully high 9.1 percent.

"We knew ultimately that the 2012 election was going to be a big referendum on the president," said Douglas Holtz-Eakin, former director of the Congressional Budget Office who was the chief economic adviser to Arizona Sen. John McCain's 2008 presidential campaign. "But Republicans also have to say what they would do. It's not enough to say we don't like what's going on."

Texas Gov. Rick Perry teased rival Herman Cain — "I'll bump plans with you, brother" — when both rolled out ambitious proposals for a single-rate flat tax. That's a concept hailed by numerous Republicans and some Democrats for its simplicity, yet it never has managed to attract much congressional support. Former Massachusetts Gov. Mitt Romney is the lone major GOP contender not calling for a flat or flatter tax.

The 2012 contenders also are serving up a platter of familiar conservative fare: calls for deep spending cuts, reduced government regulation and an emphasis on private enterprise as the true engine of job growth and prosperity.

The plans underscore the party's attempt to respond to the biggest voter concerns of the day and capitalize on what they see it as Obama's chief vulnerability, the still shaky recovery. The candidates claim their various plans would help create millions of private sector jobs; just how is not always clear.

With polls showing that most people support increasing taxes on the wealthiest households, as Obama and Democrats are proposing, the GOP flat-tax plans would largely end up as a boon to the wealthiest, independent analyses suggest.

The tax debate coincides with spreading protests, inspired by the Occupy Wall Street movement, against economic inequality. The nonpartisan Congressional Budget Office recently reported the top 1 percent of American earners doubled their share of national income over the past 30 years, to 20 percent.

Some of the GOP plans show depth, complexity and sophistication, Holtz-Eakin said. Not every economist is as charitable or sees the GOP offerings as workable.

"I don't think any of the plans can be taken too seriously as actual policy," said Bruce Bartlett, who held top economic posts in the Ronald Reagan and George H.W. Bush administrations but now considers himself a political independent.

"The Republican goal is to nominate the person who is the most committed, most articulate in terms of the Republican philosophy. What they're competing for is who best represents that core philosophy and articulate it in a way that the base finds satisfying," Bartlett said.

No matter that some GOP dogma, such as an insistence that cuts in business taxes and government regulation will spur private-sector job growth, "is economic nonsense," Bartlett said.

All the GOP rivals would pare federal regulations.

Rep. Michele Bachmann, R-Minn., would kill the Environmental Protection Agency and repeal the 2010 Dodd-Frank financial industry regulation law. Romney is proposing a 10 percent cut in the federal workforce. Former Pennsylvania Sen. Rick Santorum wants to repeal all regulations put in place by Obama. "The federal government kills jobs. We don't need more programs and bureaucrats telling business how to operate," he says.

Economists generally agree the shortage of jobs isn't caused by government overregulation but by a lack of consumer demand. A recent Labor Department survey showed that less than 1 percent of all layoffs in the past four years have been attributed by employers to government regulation.

With consumer spending driving two-thirds of the U.S. economy, those without jobs have little money to spend. Many with jobs fear losing them, or their houses are worth less than their mortgages, so they have little spare cash or borrowing ability.

Killing off Obama's health care overhaul is a common feature of the GOP plans. So, too, is a proposal to offer American companies a chance to bring money generated overseas back into the U.S. without being taxed. But studies have shown that a similar repatriation "holiday" in 2004-2005 had little effect on job growth.

Some Republicans go further than others. For instance, Bachmann says she would consider allowing oil and gas exploration in the Florida Everglades. None of her rivals has been that bold, perhaps given Florida's importance in presidential calculus.

Hoping to coax more U.S. export jobs, Romney threatens to trade penalties against China if it does not boost the value of its currency. "If you're not willing to stand up to China, you'll get rolled over by China," he says. But former Utah Gov. Jon Huntsman, who recently served as U.S. ambassador to China, argues that such penalties probably would lead to a trade war that would hurt both economies.

On taxes, Romney would make incremental changes and move later to a simpler system. For now, he would extend Bush-era tax cuts, lower the 35 percent corporate tax rate to 25 percent and exempt investment income for those earning less than $200,000. He would extract more U.S. oil, coal and natural gas, expand trade pacts and cut federal spending.

Rep. Ron Paul's plan is the most radical. The Texas Republican, a libertarian, would scrap the income tax entirely. He contends the government didn't have the authority to impose it in the first place. He would make ends meet through excise taxes, tariffs, and a smaller government. In the process, he would abolish the Internal Revenue Service and the Federal Reserve.

Cain, the former Godfather's Pizza CEO who has replaced Romney as the GOP front-runner in some recent polls, repeatedly pushes his "9-9-9" tax plan that would cut personal and corporate tax rates to 9 percent each and impose a new 9 percent federal sales tax.

Perry's plan would give taxpayers the choice of paying at a flat rate of 20 percent or adhering to the current tax structure. He would preserve deductions for mortgage interest, charitable donations and state and local tax taxes for households earning less than $500,000 a year and offer a $12,500 exemption for individuals and dependents.

Former House Speaker Newt Gingrich has proposed a 15 percent optional flat tax. Huntsman would set up a three-tiered system with a top rate of 23 percent. Bachmann would replace the tax code with a yet-to-be specified flat tax. Santorum proposes a "simpler, flatter and fairer" tax without offering specifics. He would cut the corporate tax in half and eliminate it for manufacturers who keep jobs in the U.S.

In the past, flat tax schemes — pushed by Democrat Jerry Brown in 1992 and Republican publisher Steve Forbes in 1990 and 2000 — failed to generate much political traction, in part because most plans would put a disproportionate burden on lower-income families.

Quick studies of the current major GOP proposals by independent research groups have made similar findings.

____

Follow Tom Raum on Twitter at http://twitter.com/tomraum

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GOP on Taxes: Boehner Says 'No;' Cantor Says 'Maybe' (ContributorNetwork)

COMMENTARY | As Republicans and Democrats go back to work on a debt compromise, there is less than a month before critical mass is reached. The debt ceiling for the United States needs to be raised by August 2 or the United States will default on its loans.

Members of the GOP are holding conferences with top Democrats and the White House to hammer out a proposal to reduce the national debt. Otherwise, the Republican-led House of Representatives may not raise the maximum amount of debt the United States can borrow.

Speaker of the House John Boehner (R-Ohio) reiterated his stance by saying there will be no tax raises on working Americans or job creators. Yet his partner in House leaderships, Majority Leader Eric Cantor (R-Va.) said just a day earlier Republicans would be open to a tax increase , but only if they are cut somewhere else.

Which is it? Either there are more tax increases or their might be. It's just a small sliver of difference between what both men said during the negotiations, but it presents a wide difference in bargaining tactics. It also exposes a rift in the GOP.

Boehner must please the conservative base and the tea party when he says no new taxes. Cantor seems to be a little more pragmatic and deals with more centrist and mainstream Republicans who believe a more rounded approach is necessary to solve the budget crisis.

There are no easy answers. President Barack Obama even went so far as to say cuts in Social Security and Medicare may be an option when previously he hadn't. Both sides are supposedly still far apart on the issue. They are all agreeing to disagree even though they already agree. Leaders all come to the consensus that the national debt needs to be solved. Their dispute comes in how they should go about reducing the debt and creating jobs.

Obama's National Commission on Fiscal Responsibility and Reform warned the president and the House leadership that tough choices would have to be made. Cuts will have to come from everywhere, regardless if taxes are raised. The commission suggested raising excise and use taxes on things like gasoline to help bring in more revenue while making cuts at the same time.

Eventually both parties are going to have to realize the combination of more taxes and less spending will bring the United States into fiscal responsibility faster than severe cuts with no tax increases.

William Browning is a research librarian specializing in U.S. politics. Born in St. Louis, Browning is active in local politics and served as a campaign volunteer for President Barack Obama and Missouri Sen. Claire McCaskill.

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