The Tax Policy Center took a close look at Republican nominee Mitt Romney's proposed tax and economic plan and concluded that it would cut taxes for the richest Americans and actually raise them on the poor.
Romney has proposed cutting all tax rates by 20% and eliminating tax deductions, while also capping federal government spending at 20% of GDP.
After doing the math, the Tax Policy Center concluded that this would help the country's highest-earners and hurt the lowest-earners.
This conclusion allowed President Obama to immediately attack Romney as just being out to help "people like him" at the expense of everyone else. And it prompted the Romney campaign to blast the tax analysis as biased and issue implausible claims that Romney's economic plan would create 12 million jobs in his first term.
Regardless of what you think about Romney's tax priorities, it seems unlikely that his plan will help the struggling U.S. economy.
The problem in our economy right now is not that America's highest wage-earners, "the 1%," don't have enough spending or investment money.
The problem is that the vast middle class, which provides most of the spending in the U.S. economy, is strapped.
Romney's plan is designed around the premise that, if only rich investors and corporations had more cash available, they would make investments that would soon produce jobs for the rest of the country.
The flaw in this theory is the belief that the country is suffering from a lack of investment capital. It isn't.
The country's richest investors and companies are awash in capital.
The reason they're not spending and investing more of it, meanwhile, is that they don't think they can invest it productively--because their end customers, average US consumers, are hurting.
Romney's plan seems designed to address one key problem in the U.S. economy--the long-term structural budget deficit--and this certainly does need to be addressed. But the more pressing concern for most Americans is fixing the unemployment problem. And giving the richest Americans more money to spend and invest isn't going to do that. These Americans already have plenty to spend and invest.
- Politics & Government
- Budget, Tax & Economy