This issue will not go away until Mitt Romney honestly addresses it.
There has been a lot of attention over whether Mitt Romney’s tax plan is a $5 trillion tax CUT plan. “I’m not in favor of a $5 trillion tax cut. That’s not my plan,” Romney said at Wednesday’s debate. “My plan is not to put in place any tax cut that will add to the deficit.” If you take Romney at his word, he’s right — he’s saying that he will pay for those tax cuts by closing loopholes and other deductions. But here’s the problem for the Romney campaign: We know the math how you get to just about $5 trillion in tax cuts over 10 years. It starts with reducing tax rates across the board by 20%, eliminating the Alternative Minimum Tax and erasing the federal estate tax. Together, that comes to $450-$480 billion by 2015. You do that over 10 years (standard budget estimations), and you get about $5 trillion. But what we don’t know is the math of how you offset the nearly $500 billion per year as Romney has pledged, because the Romney campaign has yet to provide any specifics about what he would cut. But we do know that he has ruled out:
– touching preferential rates on capital gains and dividends (Simpson-Bowles does RAISE these rates for their offsets), – exemptions for Roth IRAs and 401(k)s, and – the exclusion of capital gains on home sales.