Dems’ Misleading Math

• June 21, 2012 10:17 am


Democrats are attacking the Ryan budget using a misleading study, according to tax reform advocates.

There is a breathless article in today's Washington Post by Lori Montgomery detailing a study by JEC Democrat staff of the House GOP budget's tax reform plan.  The headline of the report is that the tax plan, if implemented, would be a net tax hike for middle and upper-middle income households, and a giant tax cut for high income households.

The only problem is that the analysis contains a fatal flaw that Lori Montgomery should have seen.

The study uses current revenue baselines that are 3 percent higher than the GOP budget’s prescribed tax rate, which misleadingly assumes that taxes will have to go up on the middle class to make room for tax cuts, according to Americans for Tax Reform.

The House tax reform outline is not intended to raise 21 percent of GDP in tax revenues.  It is intended to raise 18-19 percent of GDP.  When you're trying to raise more tax revenue in either case with a top tax rate of 25 percent, the extra money has to come from additional base broadening.  That additional base broadening, by definition, would have to come from further down the income spectrum.  But none of this matters because this isn't the House GOP budget's tax plan.  It's a Frankenstein's monster version of it, neutered of its revenue-neutral features.

Obama has used the House budget to hammer Mitt Romney for backing tax cuts. The Democrat-controlled Senate, meanwhile, has not passed a budget in three years.