Those mischievous little number crunchers over at the Tax Policy Center are at it again! They pulled out their calculators and concluded that even with a cap on tax deductions, Mitt Romney's tax plan won't raise enough money to pay for his 20% across-the-board tax cuts and repeal of the alternative minimum tax. Naturally, the campaign is none too pleased:
[The TPC] take[s] Governor Romney’s suggestion that placing a cap on itemized deductions could be one way to help offset the costs of cutting marginal rates by 20 percent across the board and repealing the Alternative Minimum Tax (AMT). While Governor Romney has proposed cutting marginal rates across-the-board by 20 percent and eliminating the AMT, he has only suggested that capping itemized deductions is one option that could be explored, and there are others. Just as President Reagan outlined broad goals of tax reform (and Reagan’s goals were far less specific than Mitt Romney has been here), technical details like this will be worked out with Congress. Governor Romney provided a range of figures – $17,000, $25,000 or $50,000 – as illustrative examples of how this could work, where taxpayers could choose which deductions they would claim up to a certain level. TPC has erroneously taken these illustrations and presented them as the Governor’s actual plan.
The post is written by Romney Economic Policy Director Pierce Scranton and he neglects to link to anything throughout, so unless you're one of those people who reads about tax policy for a living, you'd probably have no idea what he's talking about. My guess is that he prefers it that way. Anyway, the question posed by the blog post over at the TPC is "How Much Revenue Would a Cap on Itemized Deductions Raise?" Maybe I'm a softie for nerds being picked on by pushy oafs, but there's nothing in the post written by Roberton Williams or the analysis presented that suggests that the tax deduction cap is Mitt Romney's "actual plan." Here's the introductory paragraph in Williams' post from yesterday:
In last night’s debate, Mitt Romney repeated the idea that he could pay for much or all of the 20 percent rate reduction and other tax cuts in his tax plan by capping itemized deductions at $25,000. He had previously suggested a $17,000 cap in an interview and, in the first debate, $25,000 or $50,000 caps—and possibly phasing deductions out entirely for high-income taxpayers. Capping deductions would raise revenue in a highly progressive way but how much revenue and how progressive depend on the cap.
The entire post continues in this matter-of-fact prose concluding that the hypothetical caps that have been mentioned by Mitt Romney would all raise a mind-numbing amount of money but concludes "Without more specifics, we can’t say how much revenue such limits would actually raise. But these new estimates suggest that Romney will need to do much more than capping itemized deductions to pay for the roughly $5 trillion in rate cuts and other tax benefits he has proposed."
Okay, so more things need to occur to make the tax plan revenue neutral. No big deal. Just crunching some numbers BASED ON THE INFORMATION AVAILABLE because that's what they do. But that doesn't abate Mr. Scranton's displeasure:
[I]t’s noteworthy what TPC leaves out of their analysis. Reading the TPC’s blog post might leave a reader with the impression that they have shown everything that could be used to offset the the [sic] Governor’s plan. In fact, there are about $1 trillion in “tax expenditures” in the tax codeeach [sic] year, and itemized deductions represent a portion of this overall amount. There are hundreds and hundreds of billions in other tax expenditures that could be used to help offset the rate reductions to ensure the plan meets the goal of not adding to the deficit.
In other words, Scranton wants everyone at the TPC to set aside their spreadsheets and analytical instincts and start picking things at random to make the math work. Other smart people have no problem making convenient assumptions in order for the numbers to shake out. WHY OH WHY Tax Policy Center can't you do the same? They aren't wired that way, dude. They require actual, like, numbers and stuff.
But the most hilarious part of the post is when Scranton says that the TPC doesn't consider all the studies that say Romney's tax plan can work:
TPC’s non-analysis of Governor Romney’s tax reform plan does ABSOLUTELY NOTHING to refute numerous independent analyses from experts at the American Enterprise Institute, Heritage Foundation, the Tax Foundation, Princeton, Rice and Harvard that have demonstrated the Romney plan works.
One thing worth noting here is that Scranton doesn't link to any of these studies, which is both convenient and annoying. "We believe in these studies so much you can go find them on your own!" A second thing worth noting is something that Josh Barro of Bloomberg shared about these "studies" recently:
The Romney campaign sent over a list of the studies, but they are perhaps more accurately described as "analyses," since four of them are blog posts or op-eds. I'm not hating — I blog for a living — but I don't generally describe my posts as "studies."
Barro breaks down all of these down, LINKS TO THEM, and finds that they all have something in common – all of the "studies" rely on optomistic assumptions that plug in numbers to make the plan "work."
Look, Romney campaign – it's become clear over the past few months that it's far easier and more politically prudent to hate on others than actually tell us what you would do to reform the tax code. Just quit acting surprised when the people with calculators rush in to tell you that the math doesn't work.
UPDATE: A follow-up from the TPC this morning tries to clarify a few things about the analysis including that it is not – NOT – an analysis of Mitt Romney's tax plan since he more or less doesn't have one:
The new tables do not analyze Mitt Romney’s tax plan. Governor Romney has not released a detailed tax plan, so it is not possible to analyze it fully. Nor has Romney articulated a specific proposal to cap tax deductions.
You can expect a rebuttal from the Romney campaign any minute now.
How Much Revenue Would a Cap on Itemized Deductions Raise? [TaxVox/TPC]
Options to Repeal or Limit Itemized Deductions [TPC]
The Tax Policy Center Doesn't Analyze Romney's Tax Reform Plan, Again [Pierce Scranton/Mitt Romney via The Hill]