"Mitt Romney on taxes - Fudging the numbers" at the Economist

Mitt Romney on taxes - Fudging the numbers

at the Economist

http://www.economist.com/blogs/democracyinamerica/2012/10/mitt-romney-taxes

"SNIP................................................

TUESDAY night on the fading dowager of cable news that is CNN, Wolf Blitzer asked Mitt Romney about his tax proposals. What specific deductions did Mr Romney propose to eliminate in order to finance his promise to cut income-tax rates by 20%, Mr Blitzer asked? Home mortgage interest? Charitable donations? No, Mr Romney said, he'd keep those. So how would he limit deductions? Would he institute an overall deductions cap of $17,000, as he's vaguely mentioned on the campaign trail? Well, Mr Romney said, a cap might be possible; it could be $25,000, it could be $50,000. (He appears to have backed away from the $17,000 figure.) "Would that add up to the $4.8 or $5 trillion it's been estimated your comprehensive tax reductions would cost?" asked Mr Blitzer. Well, Mr Romney replied, that $5 trillion number is wrong, because it doesn't take into account the elimination of deductions. "The president's charge of a $5 trillion tax cut is obviously inaccurate and wrong because what he says is, all right, let's look at all the rates you're lowering, and then he ignores the fact that I also say we're also going to limit deductions and credits and exemptions."

You see what he just did there, right? If the United States were a publicly-traded company and Mitt Romney were its CEO, and if that interview had been a conference call with analysts, shares in USA Inc would have dropped 5% in the subsequent minute. What Mr Blitzer asked was: do your proposed revenue enhancements fully compensate for your proposed $5 trillion in revenue cuts? And Mr Romney answered that it won't really be $5 trillion in cuts, because of the enhancements. Mr Romney is not mathematically illiterate; he's a former CEO who is very used to answering pointed questions about numbers. He understood what Mr Blitzer asked. His response is an acknowledgment that he can't make his numbers add up, so he's hiding behind a smokescreen of feigned incomprehension. The deduction caps can't make up for the tax cuts he's proposing. Either some of those cuts won't happen, or the deficit will go up.

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