Mitt Romney is now viewed as the Republican front-runner in the race for the White House in 2012. And, of course, as a serious presidential candidate, Romney needs to have a tax plan in place. Others have floated flat tax plans , but Romney isn’t one of them. Indeed, so far Romney’s tax plan looks a lot like what we have now — but with lower taxes for some.
Romney’s tax plan would cut taxes for many, reducing them for the wealthiest. Romney wants the so-called Bush tax cuts to remain in place beyond their set expiration at the end of this year. In either cases — whether the cuts expire or not — Romney’s plan calls for some small changes to the current tax system. Some of those include:
- Cutting the corporate taxe rate from 35% to 25%
- Repeal taxes levied against the top earners in the 2010 health care reform bill
- Get rid of the estate tax
- Lower the gift tax rate to 35%
- Eliminate taxes on dividend income, interest and long term capital gains for those earning less than $200,000 a year
The tax plan advanced by Romney does not upend our marginal tax rate system right now. What he does do, though, is promise that at sometime in the future he wants to move toward a flatter tax. So, Romney does propose changes, but these changes are relatively small, at least from the standpoint of some of the grandiose plans to dismantle the IRS and change the system completely to a flat tax, or even a fair tax .
What about the Deficit?
According to the Tax Policy Center, Romney’s tax plan would result in an increase to the deficit. That, of course, assumes that the cuts in revenue aren’t balanced by significant cuts to spending. In order for any tax cut plan to work, serious cuts to government spending would need to be made.
All of the debate over taxes, though, tend to overlook an important point: What do we, as a nation, want to pay for? Many politicians talk about cutting spending, but when it comes time to make the cuts, it’s difficult. Maybe, before we talk about reforming the tax code, we need to have a national discussion about funding priorities, and what we want to pay for. Is education important? Do we want to fund projects in rural areas? Could our national budget be smaller if we didn’t send military aid to other countries? Do we want a social safety net of some sort (like Social Security and Medicare) to help us as we age?
These are questions that we should probably try to answer before we start reforming the tax code. Unless we know what we, as a nation, are willing to pay for, we’ll have a hard time figuring out where spending should be cut — and if it’s even possible for us to handle the loss of large amounts of tax revenue.
Romney’s plan is a solid middle ground. It appeals to some who want to see changes to the tax system, but isn’t so radical that it will turn everyone off.
(Photo: World Affairs Council of Philadelphia )