Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Paul Ryan and the Tax Man (Fact Checking the Claims of Joe Biden)
Hotair ^ | 10/13/2012 | Jazz Shaw

Posted on 10/13/2012 9:43:00 AM PDT by SeekAndFind

In a way, it's probably good that Joe Wilson wasn't sitting up front at the Vice Presidential debate this week nor, more importantly, at the various political roundtables analyzing it ever since. Had he been, the congressman would probably have gone hoarse by now from all of the opportunities to stand up and shout, "You lie!" And that has certainly been the overriding theme since the opening moments of the battle between Paul Ryan and Joe Biden. Both sides are claiming that the candidates' performances were overshadowed by the "fact" that each of them were lying over and over and over. But among all the bones of contention, one of the most fiercely fought has been the exchange surrounding the proposed GOP tax plan put forward by Mitt Romney.

Over at The Corner, Avik Roy digs into a variety of You Lie themes, but highlights the following when it comes to the tax question.

Biden repeated the long-debunked claim that Romney seeks a “$5 trillion tax cut,” when in fact Romney’s tax proposal is designed to be revenue-neutral. Furthermore, Biden claimed that there is a study from AEI supporting his claims. “The American Enterprise Institute study [says that] taxes will go up on the middle class,” claimed Biden. There is no such study. Two AEI scholars, Matt Jensen and Alex Brill, have in fact made the opposite case.

Unfortunately, it’s exactly these sorts of arguments which invite analysts involved in the debate, such as Bloomber’s Josh Barrow, to dive in with their own reading of the tea leaves.

Mitt Romney’s campaign says I’m full of it. I said Romney’s tax plan is mathematically impossible: he can’t simultaneously keep his pledges to cut tax rates 20 percent and repeal the estate tax and alternative minimum tax; broaden the tax base enough to avoid growing the deficit; and not raise taxes on the middle class. They say they have six independent studies — six! — that “have confirmed the soundness of the Governor’s tax plan,” and so I should stop whining. Let’s take a tour of those studies and see how they measure up.

The Romney campaign sent over a list of the studies, but they are perhaps more accurately described as “analyses,” since four of them are blog posts or op-eds. I’m not hating — I blog for a living — but I don’t generally describe my posts as “studies.”

None of the analyses do what Romney’s campaign says: show that his tax plan is sound.

Being one of those annoying people who actually follows the links in stories like these to try to understand the underlying facts, I was only able to conclude that this entire argument is one big, hot mess. Going through the sources provided in Avik Roy’s piece wasn’t exactly a fool proof plan. Matt Jensen’s article doesn’t actually come out and say that the math works on Romney’s plan, but rather envisions a different set of analytical criteria where it might work. These include redefining “the wealthy” down in income by 25% for starters. Alex Brill’s piece is more strident in claiming that the math could work, but the lion’s share of the argument rests on what is effectively the trickle-down theory; when the taxes are cut, the economy is stimulated to to the point where increased revenue from growing economic activity offsets the cuts. He also makes the valid point that the study under discussion didn’t include the taxes in Obamacare as part of the baseline, which tilts the scales in Romney’s direction.

Barrow’s defense acknowledges the latter while mostly ignoring the former, but there may be a reason for that. It seems that many of the people seeking answers on this issue are looking for the cold, hard math: revenues in one column and costs in the other. Basing answers on projections which rely on our ability to predict how hundreds of millions of people will react to any given set of stimuli muddies the waters before we get out of the gate.

I think both sides are missing one important aspect, however, which still relies on behavioral prediction, but should act as a far better argument in favor of the Romney – Ryan argument. Asking us to accept what will happen under a Romney tax plan relies on said tax plan actually being enacted. And a President Romney could not put such a plan in place quickly nor single handed. Congress will have control of that process, and we all know how lightning fast and efficiently that crack team works.

No, the one thing which could make this math work even before any changes are made to the tax code is the simple fact of Mitt Romney being declared the winner of the election next month. Yes, I understand that this argument sounds just like claims that the election of Barack Obama would slow the rise of the oceans, etc. etc. etc. But there’s a difference here. The relative sea level of the planet doesn’t have access to the internet or cable news and acts independently of current events. But businesses around the country have, beyond question, been holding their collective breath in response to the advent of regulatory burdens and the coming toll of Obamacare, leading to stagnation in employment and economic growth. Taking away that threat – which will be the implication of changing White House occupants – could absolutely bring a bunch of capital in off the sideline. And the energy industry – which has been effectively stymied in some sectors – could, by most projections, start putting millions of more people to work in a matter of months once work on the pipeline gets into full gear and the issuing of more exploration permits is on the horizon. Those two factors alone could produce the type of economic growth which would already be more quickly filing government coffers before the tax reform debate even begins.

That’s the sort of change which will make enacting these types of comprehensive tax reform possible. If you’re arguing from a position of strength, with unemployment falling and more cash coming in to the treasury, it’s a heck of a lot easier than if you have to rely on murky projections of what “might happen” later. Paul Ryan didn’t do himself any favors when he told a reporter that he didn’t have time to go through the math of the tax plan. But I think his argument could be clarified and strengthened by highlighting the effect on the economy described here. That’s why this is the argument which I believe the pundits should be having this weekend, rather than tidying up sums in columns off the AEI study.


TOPICS: Culture/Society; Government; News/Current Events; Politics/Elections
KEYWORDS: biden; paulryan; ryan; taxes

1 posted on 10/13/2012 9:43:12 AM PDT by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

The Romney/Ryan plan depends on one thing to suceed: more taxpayers. It’s a simple as that. With rising employment, more people are paying taxes, thus tax revenue also is rising.


2 posted on 10/13/2012 9:47:42 AM PDT by afraidfortherepublic (Joe Biden is reported to be seeking asylum in a foreign country so he does not have to debate Ryan.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: afraidfortherepublic
The Obama plan cannot succeed (for the people) no matter how you slice it. If they raise taxes on small businesses it will mean budget cuts and layoffs leading to less tax revenues.

When that happens they will look for other ways to tax the people who are still working with value added taxes, real estate and auto transaction taxes and surcharges on utilities, phones and computers. When that happens the government will devour our society.

I think everyone should give serious thought to what they will do when the dollar is worth $.25 cents and a loaf of bread costs $20.00

3 posted on 10/13/2012 10:00:57 AM PDT by Baynative
[ Post Reply | Private Reply | To 2 | View Replies]

To: SeekAndFind
An amazing image that perfectly sums up Paul Ryan’s struggle against Angry Joe Biden and Martha “Barry danced at my wedding” Raddatz.
H/T: HumanEvents.com

4 posted on 10/13/2012 10:06:22 AM PDT by radioone ( Main Stream Media. The Government built that.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Some far smarter than Bite-Me and Zero folks have said that Romney’s math is workable. I guess the grasp of basic mathis above the whole Admin’s pay grade...


5 posted on 10/13/2012 10:24:05 AM PDT by trebb ("If a man will not work, he should not eat" From 2 Thes 3)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
No, the one thing which could make this math work even before any changes are made to the tax code is the simple fact of Mitt Romney being declared the winner of the election next month.

I respectfully disagree in part. Before the flood of held money would be released as capital investment and labor investment, businesspeople will want to see and to measure the changes that a new Administration would apply on day one, week one, and month one. That will establish trend lines that can then be applied to business planning.

Then you have the parts of change that have to come from Congress. For those changes, you have to think in quarters and years, not days or months, especially if the Democrats continue to hold the Senate. Regardless of what the Democrats tell us in their public utterances, gridlock requires two groups of people to play, not one. Both sides are responsible for the freezing of disaster-avoiding change in the Congress. For two years, Congress has been "kicking the can down the road" on financial responsibility. The United States has a deteriorating credit score with the credit rating agencies. How low can it go? Business will pay attention to that.

Throughout the VP debate, Biden asked for specifics. That tells me that Biden didn't read what Ryan got passed in the House. The details are there. The specifics are there. And what did we see from the Senate with regards to details? From the White House with regards to details? Speeches. "I'm sorry, we can't score speeches."

My expectation of a R/R win is that it will take six months to ramp up the change needed to convince the many holders of money to make the investments in capital and labor increases in sufficient amounts to measurably turn our economy around. That means that it will take at least a year for the turnaround to generate enough new activity to have a significant effect on unemployment and underemployment, income for middle-class workers, and a positive effect on Gross Domestic Product. (I sincerely hope I'm being overly pessimistic in this estimate, but I would rather shoot for feasible than pie-in-the-sky.)

On a slightly different topic, there has been considerable hand-wringing about calls to eliminate popular tax deductions. Let me say this about that: most of the arguments I've seen have been incomplete, and don't take into account the changes in tax rates that can work along with the elimination of deductions to make the whole change tax-neutral to middle-class Americans. If asked, the IRS can easily provide a corpus of tax data (without identification) that would allow our brain trusts to determine the mix that will have a minimum or zero impact on the typical middle-class family and the small businesses of this country.

Given that data, anyone reasonably experienced with Excel or similar spreadsheet programs can come up with the goal-seeking algorithms that will show the proper mix of deduction elimination and tax rate change to eliminate the distortions that deductions cause. In the case of businesses who need to report the cost of doing business to calculate profit, the rules could be considerably simplified and made more fair so that the calculation of business expense isn't the pothole-filled road it is today. (Want to promote energy saving? Make it far more attractive for people to be able to work at home where it's feasible. Imagine the fuel savings, the carbon saving too.)

In summary, the tax changes and the regulation changes will need to be made and "set in stone" before business will open the coffers.

6 posted on 10/13/2012 12:00:58 PM PDT by asinclair (Bulls*it is a renewable resource.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Baynative

RE: The Obama plan cannot succeed (for the people) no matter how you slice it. If they raise taxes on small businesses it will mean budget cuts and layoffs leading to less tax revenues.

************

The Obama zombies on the left (including Obama and Biden himself ) continue to insist that the tax increases on the “rich” only affects 3% of businesses.

What they don’t realize is that these 3% are the most successful and are the ones employing the most number of people.

What Romney ought to do in the next 2 debates is to at least cite AN EXAMPLE ( talk to one of these 3% small businesses Obama does not care about) of how Obama’s tax increase on the “rich” will affect employment.


7 posted on 10/13/2012 1:38:12 PM PDT by SeekAndFind
[ Post Reply | Private Reply | To 3 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson