Romney’s plan will require a tax increase because it would open up a $360 billion hole beginning in 2015. The Tax Policy Center suggests he would have to make up the difference by reducing tax expenditures and increasing the tax burden on middle- and lower-income households by at least $41 billion.
Romney is correct to tackle tax expenditures, which cost the U.S. $1 trillion each year. But that should be part of a bigger conversation about whose taxes should go up and when. Some tax changes hurt less than others. For example, the U.S. should tax income from capital gains and dividends, which disproportionately benefit wealthy earners, at the same rate as earned income. That could raise about $1 trillion over 10 years. More creative and efficient taxes should also be on the table. A carbon tax, for example, could bring in $310 billion by 2050.
The deficit is not irreducible. The Simpson-Bowles report, for example, lays out a mix of tough spending cuts and significant tax changes that increase revenue while keeping progressivity in the U.S. tax code. Every serious deficit reduction plan calls for increased revenue along with spending cuts.
If they were being honest, both presidential candidates would likewise acknowledge that taxes must be raised. And there’s no way to make the arithmetic work without some revenue from the middle class. So vote for whomever you like this November. Either way, your taxes are going up.
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