It is very easy to outline a tax plan if you only look at the benefits side rather than the costs side of the cost-benefit equation. However, the numbers you outline above simply don't add up.
Originally Posted by dbroncos78087
Here is a thumbnail of the Romney plan, part of which you apparently support:
Here is another analysis of why the "broaden the base, remove loopholes" approach does not work. The study upon which that analysis is based can be found here.
If you take the numbers from the Tax Policy Center and the Treasury (for the elimination of the estate tax), the 10 year costs break down like this:
Lower tax rates by 20 percent = $2.5 trillion
Eliminating the Alternative Minimum Tax = $700 billion
Repeal of high-income payroll tax = $300 billion
Repeal the estate tax = $150 billion
Tax cut for corporations = $1.1 trillion
The interest costs get you to $5t.
There are as many reasons for tax deductions as there are deductions. However, to grossly generalize, they are there for a purpose. For one major example, the mortgage tax deduction exists to encourage home ownership.
Removing it would cause a hit to homeowners and to the housing market. It's nice and easy to talk about "removing almost all deductions" but when you look at the numbers, as the Tax Policy Center did, above, they don't amount to the revenue that a rate decrease would cost. Removing deductions would also have negative effects on some economic sectors. For a video version of this same argument, try here.
In short, I agree that we should look at deductions. We should almost certainly get rid of the scam that is our capital gains tax rate exception, and we should examine particularly those deductions that encourage income manipulation like Cayman Islands and Luxembourg accounts. What we should not do is throw the baby out with the bath water.
Last edited by Labgrownmangoat; 11-14-2012 at 10:23 AM.
Reason: *added a vital "not" to the last sentence.
1 Kings 11:3: “He (Solomon) had seven hundred wives of royal birth and three hundred concubines, and his wives led him astray.” -- Biblical marriage. One man, seven hundred women.