I've been making a short video about the many lies told by Mitt Romney during the debate. This project hasn't been easy, because the fibs were so numerous, and because it isn't easy to make tax stuff comprehensible and fun to watch. And it's really hard to come up with good visuals. (Stanley Kubrick once said that it should be possible to make a film out of any book or subject matter. Easy for him to say. He never tried to create a movie about tax policy!)
Last night, I made one catch which no-one else seems to have noticed, except -- to a degree -- Igor Volsky, writing in Think Progress. And even he didn't turn on all the lights. Let's begin by quoting Igor:
6) “I saw a study that came out today that said you’re going to raise taxes by $3,000 to $4,000 on middle-income families.” Romney is pointing to this study from the American Enterprise Institute. It actually found that rather than raise taxes to pay down the debt, the Obama administration’s policies — those contained directly in his budget — would reduce the share of taxes that go toward servicing the debt by $1,289.89 per taxpayer in the $100,000 to $200,000 range.I looked at that study. Not only does it not say anything about Obama raising taxes on middle-income families -- it says, in fact, that Romney will make people in that income bracket pay more. Substantially more.
And there's no way anyone can claim liberal bias, since the American Enterprise Institute is very (one might even say notoriously) conservative. It's the home of Michael Ledeen, for cryin' out loud.
First, you should understand that this study isn't about taxes in general. It's about the amount of taxes being used to pay for our debt. Over the years, people all over the world have purchased our Treasury bills because the interest rate is very attractive. Those sweet, sweet interest payments come out of federal taxes.
The AEI study looks at that one part of the overall tax burden and focuses on how the debt service payments are spread across all income groups. For now, I'm going to focus on the $100,000 to $200,000 group, because that's what Igor did. (Some of you will want to have an argument about which numbers best define the middle class. Let's thrash that one out on another occasion, all right?)
The results are remarkable. The story is told in two charts, labeled Table 5 and Table 6. Here's Table 5:
Understand: That number -- $3,742 -- is what those taxpayers will fork over (for that purpose, over that period of time) if if if the status quo remains status quo.
Now let's look at how the number will change if Obama's proposed new tax policy is allowed to take hold...
A-ha! Now people within the $100-200K tax bracket are paying a much lower annual figure over ten years -- $2,452 and change.
So why is there a difference between Table 5 and Table 6? Earlier in the AEI report, the authors clarify what they mean when they refer to the "Administration's Budget": If Obama has his way, the Bush tax cuts for the wealthy will finally be rescinded, and the rich will again pay what they paid under Clinton.
The Bush cuts. That is the difference.
And that was the one thing that Mitt Romney never brought up during the debate. Mitt has pledged to keep the Bush tax cuts in place. A vote for Mitt is a vote to keep those cuts for the rich in place.
Mitt lied when he said that he would not raise taxes on the middle class. By keeping the Bush tax cuts, Mitt insures that the middle class will pay $1,289.89 more. (That's Igor's math.) And remember -- we're talking only about the money that goes to service the national debt annually over the course of ten years. During that same time, the middle class will also be paying a lot more for a whole bunch of other stuff as well -- like Mitt's projected military build-up.
Here's a graphic I put together for my little video project. Not very subtle, I know. But it gets the point across:
I ask any interested or skeptical readers to double-check my reading of the AEI report. It's better if an error is caught here, in this blog post, than for a mistake to appear in my video (which, if all goes well, will appear here tomorrow). A blog post is short-lived while a video is long-lived.
Go ahead. Take me to task. Prove me wrong. I double dares ya!
Mitt may differ on his definition of "middle class."
ReplyDeleteAnother clarification may be in order.
ReplyDeleteAre the taxes to service debt for the $100,000 - $200,000 group higher under Romney than under Obama because the tax rates are higher, or because the debt is higher?
http://www.weeklystandard.com/blogs/princeton-economist-obama-campaign-misrepresenting-my-study-romneys-tax-plan_653917.html
ReplyDeleteI have to look at the study to figure out if all of this is bunk or not. A lot depends on the assumptions in place for the predictions. It will take me awhile to wade through that but here's one of the author's response to what evidently will be an Obama ad on this.
Well, in one sense, it almost doesn't matter if the AEI got it right. The important point for present purposes is whether Romney misrepresented the AEI report -- which he did.
ReplyDeleteI don't understand the graphic at all. Is it that number divided by ten? or per year?
ReplyDeleteand, I don't understand what the significance is about the number being bigger under Romney's name. That sounds like Romney is being more aggressive than Obama with those who make between 100K and 200k.
that 250,000k consideration as being upper class is bunk.
Anybody making more than 75,000 dollars a year is upper class nowadays.
Sandro, look at the tables from the AEI study that Romney himself cited.
ReplyDeleteI focused on the 100-200k bracket because that's what the Think Progress guy did. I said that we can argue elsewhere as to what constitutes middle class.
The point is that Romney said that the AEI report said that Obama would raise taxes on the middle class by 3k to 4k. Yet the very report he cites says the exact opposite. It says that ROMNEY is the one who is going to make people in that range pay more.
If you really want to argue about what constitutes middle class, look further down in the same table. The same principle still holds. Romney (Table 5) will make people pay more than Obama (Table 6). That holds true in the 50-75 bracket and in the 75-100k bracket.
Just look at the tables!
Incidentally, the AEI study says that this is the amount paid annually over the course of ten years. I thought I was pretty clear about that.
The big difference is the Bush tax cuts, which made things easy on people above $250k -- and thus made things tough on everyone below.
We can argue another time as to what constitutes middle class. For my part, I think this class should be defined not just by numbers.
I also recognize that there is a difference between the traditional European definition of that term and the American definition. In Europe, "middle class" referred to anyone who was neither a worker nor a member of the landed aristocracy (with income deriving from rents or inherited wealth). Thus, the owner of a factory would have been considered middle class -- even if that factory owners was actually wealthier than the gentry.
Great, now figure out how to put all that into a 30 second commercial.
ReplyDeleteDex
I did, Dex! Tune in...
ReplyDeleteI saw the Romney interview on 60 minutes. What he said then makes it perfect clear that only people whose investment income is substantial relative to other earnings will experience a tax cut under his administration.
ReplyDeleteBasically that means billionaires. Ok, people with as little as 20mn dollars might be better off.
Harry
Kat, Here's Rosen's way to make the Romneybot's tax scheme work.
ReplyDelete"Rosen finds that Romney's plan could work if tax reform causes the economy to grow 3 percentage points more over a given period of time than it would have grown without tax reform."
Considering the Bush tax cuts look like they did nothing to add growth, I imagine this is pie in the sky supply side BS which could never be scored.