Study: Romney Tax Plan Would Most Benefit Wealthy Americans

bjbj"9"9 JUDY WOODRUFF: With fewer than 100 days to go until the November election, President
Obama and Governor Romney spent today campaigning in battleground states, trading barbs on taxes
and the economy. For the president and his Republican challenger, the day's stage was
a pair of key states, and the intended audience, the middle class. Mitt Romney stumped in Golden,
Colo., his first campaign event since returning from a weeklong overseas trip. Romney argued
again that the president's policies have failed the middle class. MITT ROMNEY (R): Now, I
know he will be able to speak eloquently and describe all the great things he's doing and
what he's going to do, but look at the results. And you look at the results, and it's been
a disappointment. His policies have not worked. They have not got America back to work again.
I understand that it's small businesses that create jobs in America, that people create
jobs, not government, and I'm going to get America working again. (CHEERING AND APPLAUSE)
JUDY WOODRUFF: The Romney campaign also went up with a new television ad highlighting economic
troubles in Florida, ahead of the president's visit there today. NARRATOR: But under President
Obama, 8.6 percent unemployment, record foreclosures, 600,000 more Floridians in poverty. He focused
on Obamacare, instead of jobs. Barack Obama, what a disappointment. JUDY WOODRUFF: The
Obama campaign countered with its own new ad. It attacked Romney for paying just 14
percent of his income in taxes in 2010, and charged his tax reform proposal favors the
rich. NARRATOR: Now he has a plan that would give millionaires another tax break and raises
taxes on middle-class families by up to $2,000 a year. Mitt Romney's middle-class tax increase
-- he pays less, you pay more. JUDY WOODRUFF: The president hit that same theme during an
event this afternoon in Orlando. PRESIDENT BARACK OBAMA: They have tried to sell us this
trickle-down tax cut fairy dust before. (LAUGHTER) PRESIDENT OBAMA: And guess what? It didn't
work then. It will not work now. It is not a plan to create jobs. It is not a plan to
reduce the deficit. It is not a plan to build our middle class. It is not a plan to move
our economy forward. JUDY WOODRUFF: Mr. Obama again highlighted a study by the nonpartisan
Tax Policy Center that concluded Romney's proposal would provide large tax cuts to high-income
households and increase the tax burdens on middle- and/or lower-income taxpayers. But
Eric Fehrnstrom, a top Romney adviser, called the report -- quote -- "a joke" and raised
questions about its impartiality and methodology. The sharpened debate on tax fairness underscores
the importance both campaigns have placed on middle-class voters. A recent NBC News/Wall
Street Journal poll gave Mr. Obama a 16-point lead on Romney when it comes to who would
better look out for the middle class. For a closer look at what exactly is in the Romney
tax proposal at the heart of this political fight, we turn to Bill Gale of the Tax Policy
Center. He is a co-author of the report in question. And Scott Hodge of the also nonpartisan
Tax Foundation, he has a different read on the Romney plan. And, gentlemen, we thank
you both for being with us. BILL GALE, Tax Policy Center: Thank you. SCOTT HODGE, Tax
Foundation: Thank you. JUDY WOODRUFF: So, Bill Gale, to you first. Just quickly, how
do you respond to the Romney adviser who called this assessment a joke and he questioned its
impartiality and methodology? BILL GALE: Well, first thing, let's be clear. That's a shoot-the-messenger
kind of answer. If they had a substantive response to our analysis, I presume that they
would make a substantive response. Last fall, when we put out analysis of the other Republican
candidates' tax options, the Romney campaign liked our analysis a lot and said very nice
things about us. So it seems like their opinion of us depends on whether we're reporting on
what they do or what someone else does. JUDY WOODRUFF: Well, Bill Gale, let me ask you
what in a nutshell did the Tax Policy Center conclude about where the tax burden falls,
assuming the Romney plan were enacted -- tax plan? BILL GALE: Well -- thank you. We did
a very straightforward exercise. We said, Governor Romney wants to cut rates by 20 percent.
He doesn't want to raise the rate on capital gains or dividends or other saving investments.
But he wants his reform to be revenue-neutral. That means you have to raise the revenue somewhere
else. We took the most optimistic way, the most progressive way to raise that revenue.
And we showed that, even under those circumstances, there would be a big tax cut for high-income
households and a tax increase for middle-income households. JUDY WOODRUFF: That's boiling
it down to a great degree. But... BILL GALE: Yes, and what I want to emphasize is it's
a matter of arithmetic. It is not some incredibly fancy calculation. It's simply that, if you
cut tax rates for high-income households, you lose so much revenue there, that you can't
make it up by shutting down the tax exemptions that high-income tax households have. JUDY
WOODRUFF: So, Scott Hodge, what do you make of this analysis from the Tax Center? SCOTT
HODGE: Well, I think you have to be fair and what Bill and the Brookings have done is,
I think, a pretty reasonable assessment. But you have to understand that it is not an analysis
of the Romney plan. The -- Romney has only set out some very, very broad parameters in
terms of tax policy, in terms of cutting the individual rates, all of them by 20 percent,
cutting the corporate rate by 10 percentage points. But what Brookings did was actually
fill in a lot of this unknowns with their own assumptions and then analyzed it. So this
is not technically an analysis of the Romney plan. It is one option for how to get from
here to there. There are many ways in which Romney could fill out the details of his plan.
They of course are not forthcoming with that, because they would like to keep to a big-picture
approach. So we have to be very careful about reading too much into this, because it really
is not the Romney plan. (CROSSTALK) JUDY WOODRUFF: All right, so filling in a lot of assumptions,
what about that? BILL GALE: Let me respond to that. It's correct that Governor Romney
has not specified all the details of his tax reform plan. He has specified the goodies,
the tax cuts, but he's not specified how he will pay for them. If he would do so... (CROSSTALK)
SCOTT HODGE: He may not even pay for them. He may decide that we are going to scrap revenue
neutrality. BILL GALE: No. Well, he has said he wants it to be revenue-neutral. (CROSSTALK)
JUDY WOODRUFF: Revenue-neutral, meaning money is not raised -- that taxes are not raised.
BILL GALE: Exactly, meaning, on net, the average tax cut is zero. So we took the options that
he said he wanted. And then, when we filled in how to pay for that, we did that in a way
that -- that fills it in most by taxing high-income households, OK? So if Romney wants to finance
his tax cuts with spending cuts, that's going to be even more regressive, because spending
cuts go largely to low- and middle-income households. So we -- we made what is the most
optimistic assumptions in the filling-in part, and still came out to the conclusion that
I mentioned. JUDY WOODRUFF: What about that explanation? SCOTT HODGE: Well, one of the
most interesting aspects of the study is that it really confirms how progressive our current
income tax system is. And what the study unfortunately doesn't show is that about half of all Americans
pay no income taxes whatsoever. And the vast majority of income taxes are paid by the top.
In fact, a recent CBO study shows that the top 20 percent of taxpayers pays 94 percent
of all income taxes. And so, they are correct. It's mathematically impossible to cut all
tax rates without somewhat benefiting the rich, because the rich are the only ones paying
income taxes. Meanwhile, we have half of all Americans paying no income taxes whatsoever
and benefiting from about $100 billion of refundable tax credits, even though they pay
no income taxes. So, we're going to have to have a big decision here on tax reform. Do
we put some of those non-payers back on the tax rolls, and how many should avoid paying
taxes? JUDY WOODRUFF: What other -- what more information would you have needed, Bill Gale,
in order to make a fuller, a more complete analysis of the Romney plan? BILL GALE: Well,
he -- the governor would simply have to specify how he wanted to pay for the rate cuts that
he wants. He had specified that he doesn't want to raise dividend and capital gains tax
rates. But he hasn't specified any other way of paying for the tax cuts. JUDY WOODRUFF:
And what's your sense of why he hasn't done that? SCOTT HODGE: Well, because, the more
details you put out there, the more room that you have for others to shoot holes in it.
And I think what wants to do -- and I'm not a surrogate for the Romney camp, by any means
-- I think what they are trying to do is stay to the big picture and talk about the bigger
issues here and that their belief is that when you cut marginal tax rates, you see economic
growth. And they have a lot of research behind their belief in that. And I think that that
is the message that they are trying to... (CROSSTALK) JUDY WOODRUFF: Does that show
up in your analysis, that there's more... (CROSSTALK) BILL GALE: We do have some behavioral
responses. And we did analysis allowing a growth effect. The growth effects of revenue-neutral
tax reform can be vastly overstated. Congressional Budget Office, Joint Committee on Taxation
has done analysis showing relatively small effects. In 1986, we had a big revenue-neutral
tax reform. We didn't get a big growth effect out of that. And the answer is because the
net -- the reason why is that the -- essentially, the average marginal tax rate doesn't end
up changing that much in a revenue-neutral reform. JUDY WOODRUFF: Respond to that. SCOTT
HODGE: Well, there are lots of ways to get from here to there. And if you designed it
in one way, you are going to get poorer results. If you design it in a more pro-growth manner,
you can get vastly better outcomes. JUDY WOODRUFF: Bill Gale, do you at the Tax Policy Center
plan to do an assessment of the Obama tax reform plan? BILL GALE: We have done assessments
of the president's budget every year when it comes out, in fact, assessments that are
much more detailed than and extensive than this particular paper that came out yesterday.
We have done estimates of the Republican candidates' tax reform plans. We will continue to estimate
anything we can get our hands on, basically. JUDY WOODRUFF: All right, we are going leave
it there. Scott Hodge, we thank you very much with the Tax Foundation. SCOTT HODGE: Thank
you very much. JUDY WOODRUFF: Bill Gale with the Tax Policy Center. Gentlemen, thank you.
BILL GALE: Thank you. JUDY WOODRUFF: And you can watch both candidates in action on the
campaign trail today. We have posted their full speeches on our Politics page. urn:schemas-microsoft-com:office:smarttags
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place urn:schemas-microsoft-com:office:smarttags country-region urn:schemas-microsoft-com:office:smarttags
State urn:schemas-microsoft-com:office:smarttags City JUDY WOODRUFF: With fewer than 100 days
to go until the November election, President Obama and Governor Romney spent today campaigning
in battleground states, trading barbs on taxes and the economy Normal Microsoft Office Word
JUDY WOODRUFF: With fewer than 100 days to go until the November election, President
Obama and Governor Romney spent today campaigning in battleground states, trading barbs on taxes
and the economy Title Microsoft Office Word Document MSWordDoc Word.Document.8