Tax Foundation takes aim at Romney tax study

The Tax Foundation on Wednesday became just the latest analyst to take a whack at a think tank study questioning the math behind Mitt Romney’s tax plan. 

In a new study, the foundation said that the Tax Policy Center study — which President Obama’s campaign has been citing for weeks — did not account enough for the economic growth that the GOP presidential nominee would spur with his plan. 

In fact, the conservative-leaning group asserted that some of the planks in Romney’s proposal — cutting the corporate tax to 25 percent, for instance — would pay for itself, and that the entire plan would spark enough growth to recover 60 percent of the revenue lost from cutting tax rates.

Romney’s plan, the study found, could increase economic growth by 7.5 percent over five to 10 years. 

“Tax reform should be about increasing jobs and raising incomes and living standards, not just about closing the budget gap,” said the Tax Foundation paper, written by Stephen Entin and Will McBride. 

“This is not just an inside-the-Beltway exercise, and it is not about making the budget process easier or more convenient for Congress and the White House.”

The Tax Foundation study also echoes a longstanding back-and-forth over whether budget scorekeepers should take economic growth into account when considering tax proposals.

GOP lawmakers have been critical of the so-called static scoring employed in official scores from the Joint Committee on Taxation, among others, and have said that their preferred method — called dynamic scoring — would be more accurate.

But Democrats and liberals have said that there are too many uncertainties in dynamic scoring, and that it could obscure the real costs of tax cuts. 

For its part, the Tax Policy Center study said that Romney’s tax plan, if followed to the letter, would shift billions of dollars in tax burden from the highest earners to the middle class.

Romney’s tax plan calls for cutting rates across the board by 20 percent, eliminating the estate tax and the alternative minimum tax and in some cases expanding the current preferential tax treatment for capital gains.

But the Tax Policy Center, a joint venture of The Urban Institute and the Brookings Institution, has said that Romney would not be able to do that without either adding to the deficit or raising taxes on the middle class.

Romney, who has called the TPC study “garbage,” has said that he wants to keep his plan revenue-neutral, and that he would concentrate on rolling back tax preferences for the highest earners. The former Massachusetts governor also floated an idea this week of capping itemized deductions at $17,000 a year.

The authors of the TPC study — which included officials from both Republican and Democratic administrations — also expressed some skepticism that Romney’s plan would generate much economic growth.

They also said their findings would be substantially different even if they used growth figures supplied by advisers to Romney.

In its study, the Tax Foundation said that, under dynamic scoring, Romney’s plan would produce across-the-board gains in after-tax income, and that nearly all of the proposed reductions in the plan would be a net positive for the economy.

The Heritage Foundation and American Enterprise Institute, also conservative groups, have also taken aim at the Tax Policy Center study.

Most recently, Alex Brill of AEI took issue with the baseline that TPC used to score Romney’s plan, which included tax increases on the wealthy included in the 2010 Democratic healthcare overhaul. Romney has said he would repeal those taxes, but not in the context of tax reform. 

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