By James Kwak
From his closed-door fundraiser yesterday, courtesy of NBC:
“I’m going to probably eliminate for high income people the second home mortgage deduction,” Romney said, adding that he would also likely eliminate deductions for state income and property taxes as well.
“By virtue of doing that, we’ll get the same tax revenue, but we’ll have lower rates,” Romney explained.
Let’s check Romney’s arithmetic.
The home mortgage deduction was worth $22 billion to households making over $200,000 in 2009. Even if half of that was attributable to second houses—and the actual figure is certainly less—that gives you $11 billion. The deduction for state and local income taxes was worth $20 billion for those same households. So together you get a total of $31 billion.
The top 1% paid about 36 percent of individual income taxes in 2009, which were $915 billion. So they paid $329 billion in individual income taxes.
Even if we assume that all $31 billion in benefits from the deductions for interest on a second home and state and local taxes went to households in the top 1%—an unrealistic assumption, since the cutoff for the 1% is far above $200,000—that only brings their taxes up to $360 billion. Factor in the 20 percent across-the-board cut in rates that Romney has promised, and their taxes fall to $288 billion. Net, that’s a $41 billion reduction. On top of that, you have to add Romney’s proposed reduction in corporate income taxes, since the rich pay a large proportion of corporate income taxes, at least according to the Tax Policy Center and the CBO.
Republican tax cut plans fall into two categories: the ones that don’t bother pretending that they’re going to be revenue neutral and the ones that do. But the latter can never make the numbers add up because you can’t have massive rate cuts and be revenue neutral unless you’re willing to eliminate popular tax expenditures for the middle class, the preference for investment income (the most important tax break for the rich people who pay for Republican politicians’ campaigns), or both.
This is the guy who’s supposed to be the hard-headed businessman?
Update: The title is a reference to this Atlantic column, which shows that there just aren’t enough tax expenditures to balance out the huge rate cuts that Romney has promised to the 1%.
The Baseline Scenario 
You’re clearly forgetting that tax cuts pay for themselves. Done and done.
I think it’s about time you started checking Obama’s arithmetics.
The rumor is Romney can’t sing either. Let’s hope Romney wasn’t in the Mormon Tabernacle Choir. Even the psychotic Mormons don’t deserve that much auditory pain.
The top 1% starts at roughly $400k – is that far above $200k? It is double, but not six times doubling that it takes to get to the top 0.01% with salaries starting around $11M.
Take a doctor in the top 1% with a vacation house. The mortgage interest deduction might be a (relatively) significant part of their tax bill, and overall disposable income. Mitt Romney…not so much. Now the preferential treatment of investment income? Less important to the doctor, but much more important to Romney. Coincidence that he sacrifices what is more important to those lower in the top 1% as opposed to the upper 1%ers?
Pretty sarcastic. I link the way you have put forward the information, but I have a different point of view to what you have expressed here.
In all seriousness (no “snarkiness” intended), our friend James Kwak, Matt Taibbi, Michael Hastings, Mike Konczal & other bloggers whose names I can’t immediately pull up from my feeble mind have something to shoot for now.
http://www.laobserved.com/archive/2012/04/huffington_post_wins_puli.php
This is an opportune time to take it up a notch (from what is already a quality product generally) and show the paywalls, the “premium content”, the “10 site visits per month”, the Andrew Ross Sorkin style “put my nose up the bank CEO’s anus and lubricate for my ‘exclusive’ ” stenographers—-yeah, ALL the snobs and beltway jerk-ovs how real journalism and quality writing is done.
I really appreciate the levity you have towards this. These deductions can effect everyone in the country and you hit it on the head when you said “pretending”. Just once, can a candidate achieve every goal they were elected for or is it just a smoke blowing contest. I can’t tell anymore.
Clinton had a 39% tax rate and created 22 million jobs in his 8 years. W had a 36% tax rate and created 3 million jobs. Job creators or rich jerks who just want to keep their $ for themselves.
@Moses – the censorship at Huff and Post is extreme – you can tell by the sameness of opinion to fit into the two boxes. So a website that censors readers who are more intelligent than the *reporters* and have more FACTS because they actually are LIVING in the real world as teachers, US Marshals, scientists, doctors, lawyers, engineers etc etc etc does not deserve a journalism reward.
A VIRTUAL journalism reward might work better for Huff and Post and they can make one up for themselves easy enough…
@Just once, can a candidate achieve every goal they were elected for or is it just a smoke blowing contest. I can’t tell anymore.
Well that’s funny, because every 4 years I have to tell the story of how once an elected candidate becomes president, he is briefed by the military and learns things he did not know as a candidate. And there fore can no longer keep his promises, in the name of national security.
Now had you attended the yousmokeumpeacepipe convention, you could tell where the blown smoke goes too. And its not time for the great pretenders either, they aren’t scheduled to appear for another 4 years. So its just you and reality, and if you can’t tell the the difference between those, who is then responsible for doing your taxes, they might be at fault with your confusion.
I pirated this from Brad DeLong, the gist of which lends consistency to Jame’s post here:
” In the words of Greg Sargent, political blogger at the Washington Post, “Romney’s ability to lie, dissemble, distort and equivocate so effortlessly” is the great underreported story of the 2012 campaign.”
We Bay Staters remember Willard from his gubernatorial days, so many of which were conspicuous by his absences on the job, and he was as full of it then as he is today…..this isn’t by way of ad hominen cheap shot, it just happens to be the way it is.
Romney makes Nixon look like an idealist.
If they eliminate my second home deduction I will simply refinance what I can to my first home and /or turn my second home into a part time rental and add depreication to my tax bill.
This will bring in pennies.