and Peter Ferrara
The Obama campaign has poured millions into advertising claiming Mitt Romney’s tax proposals would increase taxes by $2,000 a year on the average middle class family. That is one of the most brazen fabrications in the history of presidential politics.
Romney’s tax plan only cuts taxes on the middle class – there is no middle class tax increase of any sort. Romney actually proposes cutting income tax rates across the board for everyone by 20%. That reprises Ronald Reagan’s 1981 Kemp-Roth tax cut, slashing income tax rates across the board by 25%. Those sweeping tax rate cuts helped spawn the greatest economic boom in world history over the next generation, 1982 to 2007.
Tax rate cuts promote economic growth and prosperity by increasing what producers can keep out of what they produce, as well as increasing incentives for productive activity such as saving, investment, starting businesses, expanding businesses, job creation, entrepreneurship, and work.
Romney’s proposal would cut taxes for the middle class by reducing the 25% income tax rate, which applies today to singles earning between $35,350 and $85,650, and to couples earning between $70,700 and $142,700, down to 20%, and the 15% tax rate, which applies to singles earning between $8,700 and $35,350, and to couples earning between $17,400 and $70,700, down to 12%. Those would be the lowest income tax rates on the middle class since Franklin Roosevelt’s tax increases during the Great Depression.
Romney’s tax plan would also extend all of the Bush tax rate cuts for the middle class now scheduled to expire in January. That includes the Bush reduction of the 28% tax bracket to 25%, and the Bush reduction in the 15% rate to 10% for the lowest income couples. Romney’s tax plan would reduce that 10% rate to 8%, which is another tax cut for the middle class in higher tax brackets because it reduces the rate that applies to the first dollars they earn.
Romney further proposes sweeping tax cuts for the middle class by pledging to repeal Obamacare, which includes many middle class tax increases, in direct violation of Obama’s 2008 campaign pledge not to increase taxes on singles making less than $200,000 a year, and couples making less than $250,000.
Still another middle class tax cut in Romney’s plan would eliminate federal income taxes completely on long term capital gains, dividends, and interest income for middle class and lower income workers earning less than $100,000 and married couples earning less than $200,000.
Obamacare tax increases include the individual mandate, upheld by the Supreme Court precisely because it is an effective tax on working people and the middle class. The mandate forces working and middle income taxpayers to buy expensive, politically correct health insurance rather than what they want to buy, but that Obama’s Heath and Human Services Secretary Kathleen Sebelius decides they must buy.
Other Obamacare tax increases to be paid by the middle class include new taxes on health insurance premiums, medical devices such as wheelchairs, pacemakers, stents used in heart surgery, and other common medical articles, prescription drugs, and tanning salons, among others.
Obama cites a study by the Tax Policy Center, a joint project of the liberal Brookings Institution and left-leaning Urban Institute, for his claim. But their study only challenged whether Romney’s tax proposals would be revenue neutral. The Tax Policy Center is not part of the Romney campaign, and has no authority to turn sweeping middle class tax cuts into tax increases.
Romney’s comprehensive middle class tax cuts simply follow over 30 years of Reagan Republican tax policy consistently cutting taxes on the middle class. By 2009, these Reagan Republican tax policies led to the middle 20% of income earners, the true middle class, paying only 2.7% of all federal income taxes, while earning 15% of before-tax income.
The only candidate proposing tax increases in this campaign is Barack Obama. He has already enacted into law for next year increases in the top tax rates of virtually every major federal tax, as the Obamacare tax increases go into effect, and the Bush tax cuts expire.
These tax rate increases will actually hurt the middle class and working people the most, as they will drive the economy back into a double dip recession, causing unemployment to rocket back into double digits, real wages to decline further, and poverty to soar.
The bottom line is that Gov. Romney has proposed several middle class tax cuts and no tax increases on anyone. President Obama’s claims about Romney’s plan raising taxes on the middle class is just not true. He is simply not telling the truth.
Peter J. Thomas is chairman of The Conservative Caucus, a national advocacy organization established in 1974. Peter Ferrara is Senior Fellow for Budget and Entitlement Policy at the Heartland Institute, and Senior Fellow at the National Center for Policy Analysis.