Peter Thomas and Peter Ferrara: Romney’s plan doesn’t raise middle class taxes
Romney's tax plan only cuts taxes on the middle class, repeatedly, with no middle class tax increase of any sort. Romney actually proposes cutting income tax rates across the board for everyone by 20 percent. That reprises Reagan's 1981 Kemp-Roth tax cut, slashing income tax rates across the board by 25 percent. Those sweeping tax rate cuts helped spawn the greatest economic boom in world history over the next generation, 1982 to 2007.
Tax rate cuts promote economic growth and prosperity by increasing what producers can keep out of what they produce, increasing incentives for productive activity such as saving, investment, starting businesses, expanding businesses, job creation, entrepreneurship, and work.
Romney's proposal would cut taxes for the middle class by reducing the 25 percent income tax rate, which applies today to singles earning between $35,350 and $85,650, and to couples earning between $70,700 and $142,700, down to 20 percent, and the 15 percent tax rate, which applies to singles earning between $8,700 and $35,350, and to couples earning between $17,400 and $70,700, down to 12 percent. Those would be the lowest income tax rates on the middle class since Franklin Roosevelt's tax increases during the Great Depression.
Romney's tax plan would also extend all of the Bush tax rate cuts for the middle class now scheduled to expire in January. That includes the Bush reduction of the 28 percent tax bracket to 25 percent, and the Bush reduction in the 15 percent rate to 10 percent for the lowest income couples. Romney's tax plan would reduce that 10 percent rate to 8 percent, which is another tax cut for the middle class in higher tax brackets because it reduces the rate that applies to the first dollars they earn.
Romney further proposes sweeping tax cuts for the middle class by pledging to repeal Obamacare, which includes many middle class tax increases, in direct violation of Obama's 2008 campaign pledge not to increase taxes on singles making less than $200,000 a year and couples making less than $250,000.
Those Obamacare tax increases include the individual mandate, upheld by the Supreme Court precisely because it is an effective tax on working people and the middle class. The mandate forces working and middle-income taxpayers to buy the expensive, politically correct health insurance not that they want to buy, but that Obama's HHS Secretary Kathleen Sebelius decides they must buy. Other Obamacare tax increases to be paid by the middle class include new taxes on health insurance premiums, medical devices - including wheelchairs, pacemakers, stents used in heart surgery, and other common medical articles - prescription drugs and tanning salons, among others.
Still another middle class tax cut in Romney's plan would eliminate federal income taxes completely on long-term capital gains, dividends and interest income for middle-class and lower-income workers earning less than $100,000 and married couples earning less than $200,000.
Obama cites a study by the Tax Policy Center, a joint project of the liberal Brookings Institution and left-leaning Urban Institute, for his claim. But their study only challenged whether Romney's tax proposals would be revenue neutral.
Romney's comprehensive middle class tax cuts simply follow over 30 years of Reagan Republican tax policy consistently cutting taxes on the middle class. By 2009, these Reagan Republican tax policies led to the middle 20 percent of income earners, the true middle class, paying only 2.7 percent of all federal income taxes, while earning 15 percent of before-tax income.
The only candidate proposing tax increases in this campaign is Barack Obama. He has already enacted into law for next year increases in the top tax rates of virtually every major federal tax, as the Obamacare tax increases go into effect, and the Bush tax cuts expire. Those tax-rate increases will actually hurt the middle class and working people the most, as they will drive the economy back into a double-dip recession, causing unemployment to rocket back into double digits, real wages to decline further, and poverty to soar. Even the Washington establishment CBO has begun ringing alarm bells about that.
Peter J. Thomas is chairman of the Conservative Caucus, a national advocacy organization established in 1974. Peter Ferrara is senior fellow for budget and entitlement policy at the Heartland Institute and senior fellow at the National Center for Policy Analysis.