Obama vs. Romney on Taxes
This is an excerpt from Ron Sider's column in the September/October issue of PRISM Magazine. Read the full article.
Obama and Romney both agree that we must substantially reduce federal budget deficits—although Romney promises to have a balanced budget by some unspecified time, and Obama is even less clear. But there is a huge difference in how the two propose to achieve deficit reduction. The key components of Romney's budget proposals are (1) increasing defense spending dramatically; (2) giving more big tax cuts (mostly for the richest Americans); and (3) dramatically cutting Medicare, Medicaid, and discretionary programs that include many important supports for poorer Americans.
Romney wants to keep all Bush's tax cuts (65 percent went to the richest 20 percent), reduce individual income taxes by 20 percent, repeal the estate tax, and keep the very low 15 percent tax rate on capital gains and dividends (which is why rich people like Romney and Warren Buffett pay at such a low rate) rather than tax them at the same rate as other income. These tax cuts would mean a loss of $4.9 trillion in federal revenue over10 years. These tax cuts would also substantially widen the gap between the rich and the poor, which is already more extreme than at any time since 1928. Experts at the urban-Brookings tax Policy center say Romney's tax proposal would give an additional average tax cut of $250,000 to persons making a million dollars or more a year, while those earning $40,800-$50,000 would get an average tax cut of about $512. People earning between $10,000 and $20,000 a year would actually pay an average of $174 a year more, partly because Romney wants to shrink tax advantages implemented by Obama to help lower-income families.
Obama proposes a very different federal budget. He wants to keep, not cut, effective programs that empower poor people. He also wants to somewhat increase spending to improve our national infrastructure, schools, and clean energy programs. Obama's tax proposals reflect what many polls indicate a majority of Americans favor—that the richest Americans should pay more, not less. A Buffett Rule would require that people earning more than a million dollars would pay income taxes of at least 30 percent. For people earning more than $250,000, dividends would be taxed at the regular income tax rate rather than today's low rate of 15 percent. Obama also wants to retain the estate tax. Obama fails to provide a clear plan for getting to a balanced budget within the next five or even 10 years. His fiscal year 2013 budget projected adding $6.4 trillion to the nation debt over 10 years, which is not acceptable.
There are good ways to retain effective programs that empower poor people and get to a balanced budget over five to 10 years. But neither Romney nor Obama tells us how to do that.