Solving Romney's Tax Problem

Moneybox
A blog about business and economics.
Aug. 2 2012 7:10 PM

The Easy Solution to Mitt Romney's Tax Problem

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BASALT, CO - AUGUST 02: Republican presidential candidate and former Massachusetts Gov. Mitt Romney looks on during a campaign event with Republican Governors at Basalt Public High School on August 2, 2012 in Basalt, Colorado.

Photo by Justin Sullivan/Getty Images

Mitt Romney has a problem. Like every Republican presidential candidate since Ronald Reagan, he wants to enact a large tax cut. That'll cost the government a lot of revenue. So he's been saying he'll pay for it by "broadening the base" and eliminating tax deductions. The problem is that as the Tax Policy Center has found, this means most people will actually end up paying higher taxes under Romney's plan. Households earning less than $200,000 a year will, on average, see their taxes raised.

Team Romney's new argument of the day is that the TPC failed to account for the fact that the Romney tax agenda will supercharge growth. The problem is that the TPC did in fact consider this, going so far as to use the very tax cut friendly model developed by Harvard economist Matthew Weinzierl in partnership with his colleague Greg Mankiw, an economist, Romney advisor, and Bush administration operative. The numbers just don't add up.

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But isn't there an easy answer here? The one Ronald Reagan used? The one George W. Bush used? Why not just not pay for the tax cuts? That way nobody has to pay higher taxes. Yes, that would make it difficult to complain about the high deficits under Obama, but a little hypocrisy never killed anyone in politics. And the fact of the matter is that budget deficits aren't a problem right now. So if Romney wants to cut taxes, why not just propose a huge "irresponsible" tax cut?

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.