Oct. 16 Romney Budget - Part 1

On October 16, 2012 President Obama and Mitt Romney had a Town Hall debate with CNN’s Candy Crowley as the moderator. The third question was regarding the deductions that wouldn’t be allowed in Romney’s budget plan in order to overall reduce tax rates. Romney said – he wants to change the tax code to bring taxes down so he can lower those on the middle income taxpayers as incomes are down and costs are up; his plan reduces the tax credits to people at the high end and they’re not going to pay less than what they pay today – the top 5% of taxpayers will continue to pay 60% of the taxes the nation collects and one way of doing it for the middle class is to set a total deduction allowable and the taxpayer would decide which credits to use to achieve the total; he said taxes would come down for the middle class making $200,000 or less because they wouldn’t pay taxes on interest for (savings) interest, dividends or capital gains; he said the spending and borrowing by this administration will result on taxes on the middle class and he’ll get us on track for a balanced budget. Obama responded with his tax plan is simple – cut taxes on the middle class which we’ve done by $3,600 and on small business which we have 18 times and he wants to continue along this line; the only reason he hasn’t been able to cut taxes on the 98% of taxpayers and 97% of small businesses is because the Republicans are holding the cuts for the top 2%; he wants to go back to the rates when Clinton was in and in which the economy grew; he reminded us that Romney said it was fair for him to pay less of a tax rate than the average American and their plans are different – Romney wants to go from the top down and that hasn’t worked and if he’s serious about reducing the deficit we need more revenue from the highest income earners.

I’ll get to Romney’s reply next. I want to address his comment about the 5% paying 60% of the tax revenue collected. The July 17, 2912 www.economist.com site said - According to the Tax Foundation, in 2008 "the top 5% earned 31.7% of the nation's adjusted gross income, but paid approximately 58.7% of federal individual income taxes". The Tax Foundation also said the top 10% paid over 70% of income taxes collected in 2009. None of this is to say that the top tax rate should not rise. There may be other, better, reasons to stick it to the rich. Perhaps the general welfare would be advanced if government took and spent more of the wealthy's money. Perhaps reducing income inequality would by itself improve the quality of our democratic institutions or reduce the risk of a socially destabilizing sense of exploitation and stratification. This article shows Romney’s comment on the 5% is correct. It also points out the problem of income inequality. For example, in 2011 Mars Inc. earned $30 billion and that is shared by 3 siblings. The company got 4 out of 5 stars for compensation/benefits but only 3 stars on work/life balance and 21% of their 70,000 employees are dissatisfied. The 3 siblings would earn less if they hired 10% (7,000) more workers to ease the workload of the 70,000 and each earned more money (thus more taxes paid) - it would result in shrinking the gap between the rich and middle class. There is no way for someone earning $20,000 a year to pay $500,000 in taxes. There is a way for the rich to lower their income and raise that of others. It isn’t about who pays a greater share of dollars in tax revenue – it is about paying a fair share of the income you earn; Romney shouldn’t be paying 14% of his $21 million while others pay 30% of their $50,000.