Different income groups have different propensities to spend.

Cutting taxes by $5 trillion from one group does not equal an increase of $5 trillion for another, at least in terms of spending and economic growth. Poor people spend a much higher percentage of their income.

A $5T hike on the rich made revenue neutral by cutting $5T in the taxes paid by the non-rich would have a tremendous stimulative effect. Take $5T from workers and give it to the rich and it would be intensely contractionary.

I think everyone here would agree with that. The effects would be wildly different depending on the new winners and losers.

If the workers get $5T they spend it, and overall economic activity increases, making the rich richer. So perhaps it takes less than $5T hike to the rich to balance perfectly.

(The workers would spend 4-9% of their $5T on sales taxes, but that wouldn't affect the revenue neutrality in the federal tax code.)

In any event, the dynamic effects would run the other way. Nobody thinks Romney really plans to turn into Robin Hood, so the real effect would be contractionary. Total government revenue would decrease so it would take more than $5T taxes on the workers to balance a $5T tax cut for the rich.

So in dynamic terms, such as you describe, the real effect would be more than $5T in new tax revenue required to remain revenue neutral.

But simple nominal parity was more than enough to make my point.

That would put my tax rate to 30% I am nearly 72, earn very little and I am on Social Security. I call this tax increase designed by a Mormon(LDS, or Church of Jesus Christ of Latterday Saints) simply develish.

yet they cannot or will not name a single deduction or loophole they would close to make up the $5 trillion dollar difference. They say they will work with Congress to determine that later. But if they don't yet know what loopholes will be closed, how do they know the numbers will add up? See what I'm saying?

Frankly, I believe their plan is just to use the promise of closing loopholes later as a way of getting the tax cuts passed. After they get the tax cuts, they will then not bother with closing the loopholes and eliminating deductions because that would be politically unpopular.

to break government revenues. And the beat goes on ....

Sam

to figure out exactly what loopholes can be closed without unduly affecting the middle class to raise $5 Trillion. But I am too tired to do it tonight.

https://www.jct.gov/publications.html?func=startdown&id=3642

then it is just swapping $5T from rich person A to rich person B.

There would be effects from creating new winners and losers within the 1%, but oddly enough, I have never heard Romney explain why those effects would be better.

Why is it better for a rich person to buy stock than to buy a house, for instance?

I'm sure Mitt has his reasons, but there has been no case made for what social change is intended, let alone what the point of it would be.

5 trillion in taxes?

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

I think the CBO will only score ten years out or something, so even if something has no fixed end to it the cost will be expressed as the ten-year cost, and everyone else (like think tanks) uses the same standard for compatability.

Romney claims he will cut everyone's taxes by 20%, so 20% of ten years of taxes. And presumably tax revenue would be higher than 2.3T ten years from now, so it works ou to around $5T.