Here is Bruce Bartlett's view on Romney's tax plan. Bartlett points out the similarities between Romney's tax plan and Ronald Regan's tax plan back in 1986.
"Mr. Romney’s plan is not likely to be enacted in anywhere near the form
he has proposed, if only because Congress is far more polarized today
than it was in 1986, and the major political parties are much farther
apart on the goals of tax reform. Consequently, there is little reason
to think we will see tax reform any time soon, and even if Mr. Romney’s
plan is enacted as proposed the growth effect will be small to
nonexistent."
What do you think?
This author seems very confident that Romney's tax plan, regardless of the unknown details about the deductions and loopholes, will fail in jump starting the economy and fulfilling Romney's promise of creating jobs. However, I find it much more difficult to automatically jump to that conclusion. According to Bartlett, this is very similar to the 1986 reform which he said had nothing to do with the overall unemployment fall. I find it hard to believe that a tax reform that as the author puts it would result in "compositional changes in income" would not have some effect on the slumping economy. Although the details are quite unclear at exactly Romney wishes to cut, I believe a tax reform of this nature could only assist our economy in growing.
ReplyDeleteYeah this does seem to be a bit of a bold statement. I feel like this is any easy assumption to make because of all of the hype surrounding Romney and his inability to thoroughly explain the details and math of his tax plan. Without a concrete understanding of what exactly is going to be cut, what loopholes and deductions will disappear, and how he plans on maintaining the same amount of tax revenue, it is hard to be convinced that his plan will bring growth to the economy. Having said that, I think jumping to the other end of the spectrum and saying that it has no chance at all of working is extreme.
ReplyDeleteThere is clearly a lot that is still unsaid from the plans, but just because it is unknown doesn't mean that it has no chance. More information has to be given to the public in order to fully understand this plan. I don't know what Romney means about closing loopholes, but I'm sure there is a plan behind it all. It would be interesting to see what he actually means. Only then would it be fair to say if it would work or not.
ReplyDeleteTo be clear, Bartlett does not say that Romney's tax plan won't work, he says that unless there is something which Romney has hitherto left out from the plan, it won't work. I think he makes a pretty compelling case for this being basically the same plan as Reaganomics, and I really do not see how cutting the tax rate for the wealthiest Americans while reducing deductions for middle income Americans, with far more inelastic budgets, can help. Perhaps the single best thing about the Romney tax plan is that it implies a reduction in compliance costs, due to less complicated laws, but as of yet, I have not heard anyone seriously make this point, and because we do not actually know what will be cut, no one can even effectively guess. Also, with all the attention on the fact that Romney has not disclosed his plans, and the many times he and Ryan have been asked to explain, what is the public supposed to assume? Does Romney know some kind of economic voodoo which will make business more profitable without cutting programs? If Romney is unwilling to divulge further details of his plan, then it is only prudent to do the analysis we can with the information we can, and not to thoroughly analyze the economic program of the man who may be our next president is wishful thinking at best, and simply irresponsible. If Romney wants reputable economists to back him he needs to give us all something to go on.
ReplyDeleteIt would be really interesting to see how Romney will make the same amount of revenue and cut the deficit. He plans to make large spending cuts and also plans to increase spending on more than half of the things. I don't know how his military spending going to help to decrease the deficit. His mysterious loopholes which he believes to create a magical drastic change are hard to believe unless he clarifies it. Hence, the author point that Romney's plan might not work is quite justified.
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