“We said that revenue-neutral, distributionally neutral tax reform was mathematically impossible under the five goals listed above,” the three authors said of their earlier study. “It is, of course, possible to achieve revenue-neutral, distributionally neutral tax reform, but that would require giving up one or more of the five goals.
“If Gov. Romney eventually specifies a full tax reform proposal that is not revenue-neutral and/or that raises taxes on some forms of saving and investment, there is no a priori reason why that full-reform proposal would have to raise taxes on middle-class households,” the authors wrote.
Romney’s campaign and conservative outlets like the Wall Street Journal editorial page and the American Enterprise Institute (AEI) have sharply criticized the study, with the Journal calling the Tax Policy Center “intellectual frontmen” for the Obama campaign.
Amanda Henneberg, a spokeswoman for Romney, continued that criticism of the Tax Policy Center’s analysis on Thursday.
“Only one candidate in this race is going to raise taxes on millions of families, small businesses and job creators — and that’s Barack Obama,” Henneberg told The Hill in a statement.
“President ObamaBarack Hussein ObamaEmanuel to take hot seat in Senate confirmation hearing Public officials are under physical and digital siege We must protect and support our health care safety net MORE’s policies have devastated the middle class, resulting in higher unemployment, lower incomes and greater uncertainty about the future. Another inaccurate and incomplete study does not change the fact that Mitt Romney has a plan for a stronger middle class that will lower tax rates across the board, cut the deficit and get our economy growing again.”
Conservatives have also noted that Looney served on Obama’s Council of Economic Advisers. (Gale, for that matter, was on that council during George H.W. Bush’s administration.)
And critics on the right have said that the Tax Policy Center wrongly assumed that Romney wouldn’t consider eliminating or scaling back certain tax preferences, especially some for saving and investment.
Romney, who has yet to specify which tax breaks he would target to pay for his tax reform plan, made a similar point himself in the interview with Fortune where he called the study “garbage.”
AEI has noted that repealing exemptions for municipal bonds and life insurance savings, which weren’t touched in the original Tax Policy Center analysis, could mean an extra $90 billion in revenue for the Treasury. Romney’s camp has suggested those tax breaks are “on the table.”
But in their Thursday rebuttal, Brown, Gale and Looney said that targeting those two preferences would only allow Romney’s plan to fill in some of the $86 billion gap.
The three authors said that some of the revenue from eliminating the exemption for bonds would be on the corporate side, and that the lower rates in the Romney plan would mean that scrapping those exemptions would bring in less revenue than currently projected.
They also reiterated that, in their original analysis, they had made Romney’s plan as progressive as they could, by eliminating all tax preferences for taxpayers making more than $200,000.