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Author: xLife Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 134227  
Subject: Re: I'm confused. Date: 10/5/2012 11:21 PM
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My question is simple.

In 2010 Obama was going to be criticized for raising taxes if he asked Congress to allow the 2001/2003 cuts in marginal rates and long-term capital gains to expire.

In 2013, Romney is going to take away ALL my deductions and increase my alternative minimum tax in order to finance an across-the-board 20% reduction in marginal tax rates. I think I'm going to be paying much more in taxes.

Shouldn't I consider Romney as raising my taxes? And if I adhere to conservative ideology, shouldn't I be opposed to this?


Here's my take:

Letting the Bush tax cuts expire isn't "raising taxes." Or if it is, it's Bush that prospectively raised taxes, after lowering them, by making the cuts temporary. I don't see how you can blame Obama for letting Bush's legislation take it's course.

The logic is simple, but somewhat dependent on semantics. If Walmart has a one-month sale and lowers prices by 10%, we don't say "Walmart raised prices" when the sale ends.


In Romney's case, assuming his tax plan is really revenue neutral (I don't believe it will be), it will mean tax cuts for some and increased taxes for others, so it's not really a "tax cut." Of course, he's a politician so he'll focus on the positive and call it that anyway, ignoring the tax increases that offset the cuts. But by definition, if it's revenue neutral, it's not a general tax cut. Offsetting the closing of loopholes with a general rate reduction is more properly called tax simplification.

So some folks (guess who?) will get tax cuts. Other's (guess who?) will pay more taxes. If it is truly revenue neutral* that's how it has to be.

To answer your questions:

1. "Shouldn't I consider Romney as raising my taxes?"
2. If I adhere to conservative ideology, shouldn't I be opposed to this?"

1. It depends on whether the 20% rate reduction offsets your loss of deductions or not. My hunch is that the very wealthy will get a huge tax cut, the middle and upper-middle classes will see a significant tax hike and the lower classes will get a small cut if they pay income taxes.

2. It depends on whether you believe Romney or not. I don't think he's telling the truth about the revenue neutrality of his plan. I expect he'd run up the debt like past Republicans who've promised their tax cuts won't increase the deficit.
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