Mitt Romney’s Math Problem

By TERESA TRITCH
In Tuesday night’s debate, Mr. Romney again refused to say which deductions he would limit to pay for his tax plan (including his pledge to cut tax rates by 20 percent and eliminate the AMT) which would cost some $5 trillion over ten years. Instead, he said one way to curb deductions would be to cap the total amount that taxpayers can claim against their deductible expenses. “I’ll pick a number,” he said, “$25,000 of deductions and credits, and you can decide which ones to use.”

When President Obama pointed out that Mr. Romney’s numbers did not add up and would not even begin to pay for a $5 trillion tax cut, Mr. Romney got huffy, “Well of course they add up. I — I was — I was someone who ran businesses for 25 years, and balanced the budget. I ran the Olympics and balanced the budget. I ran the — the state of Massachusetts as a governor, to the extent any governor does, and balanced the budget all four years.”

So does it all add up because he says so?

No.

The Tax Policy Center did the math yesterday. Capping deductions at $25,000 would raise $1.3 trillion in tax revenue over 10 years, $3.7 trillion short of what Mr. Romney needs to pay for his tax cut promises. Capping deductions at $17,000 – a level the Romney campaign floated a few weeks ago – would raise $1.7 trillion, a shortfall of $3.3 trillion. Even if Mr. Romney eliminated all itemized deductions, his plan would raise only $2 trillion, a deficit of $3 trillion.

Under any scenario he has sketched so far, Mr. Romney’s proposed tax cut would blow a hole in the deficit. And for what? To preserve and enhance immense tax cuts for the already wealthy.

http://takingnote.blogs.nytimes.com/2012/10/18/mitt-romneys-math-problem/