Steve Rattner, economic analyst for msnbc’s Morning Joe and the Obama administration’s former “car czar,” compared the tax proposals put forward by President Obama and Republican candidate Mitt Romney Tuesday and declared it a “very narrow fight.”
Rattner showed off charts that compared the revenue gain and loss that would result from each candidate’s tax plan, as well as the impact that the Simpson-Bowles plan would have had if it not been rejected. (The Simpson-Bowles deficit reduction plan includes both tax increases and cuts to cherished programs on both sides of the aisle, including defense and Medicare.) The chart demonstrated the $1.5 trillion in revenue President Obama’s plan to cut taxes on those making less than $250,000 would generate for the country, while Romney’s plans would either leave revenues essentially untouched or reduce them by $3.8 trillion.
“Romney has had two tax plans. His first tax plan was to essentially endorse the continuation of the Bush tax cuts, which means there’s really no change,” Rattner explained. “His second tax plan was a 20% across the board cut in tax rates which would cost $2.8 trillion dollars, plus a bunch of other stuff for another trillion, for a net loss of revenue of $3.8 trillion. He says he’s going to offset this by eliminating deductions…but he’s never specified not a single deduction to eliminate.”
The Republicans failure to specify which deductions they would do away with keeps analysts from taking their tax proposals seriously Rattner and Morning Joe guest John Heilemann, national affairs editor at New York Magazine, said.
“You cannot take a Republican seriously who says they’re going to cut the top rate if they will not specify which of those deductions they are going to curtail in order to cut taxes for the wealthy or cut taxes for corporations and still keep the revenue neutral,” Heilemann said. “You’re not serious if you’re not going to talk about what those deductions are. And Romney, and Paul Ryan and every other Republican is equally guilty.”
Rattner pointed out that biggest five tax breaks aren’t for corporate jets or big oil, but rather health care benefits, mortgage interest, charitable deductions, retirement plans, and of course, capital gains and dividends.
The bigger point, though, Rattner argued, is that either way, tax rates remain at historical lows and neither plan would change that fact. Tax rates for the wealthy were historically low until WWII when everyone’s taxes went up to pay for the war effort before seeing a dramatic cut during the Ronald Reagan presidency.
“Tax rates today are still by any historical measure very low,” Rattner said. “When we compare the Obama plan to the Romney plan, we are fighting over a very small piece of ground. This is a very narrow fight over a few percentage points of tax rates for people who make a lot of money.”