Candidates' Tax Plans May Sound Good, but They're Unsound

Romney points to Bush's tax cut on capital gains. He suggests that after this cut, revenue from capital gains taxes increased from $58 billion in 2003 to $103 billion in 2006. I think former Fed Chairman Alan Greenspan's interest rate cuts had more to do with spurring growth than the reduction in the capital gains rate: lower interest rates resulted in higher corporate profits and a higher stock market.

I see another problem with this plan. Americans already have tax-free savings accounts. They're called 401(k)s. Recent studies by mutual-fund giants Fidelity Investments and Vanguard suggest that 401(k) use has stagnated and that close to 40% of people who are eligible for the accounts do not actually fund them.

I think this leads us back an obvious problem. The middle class has been under great pressure in the last few years. Recent statistics indicate that the average American's wages stagnated and the average American faced additional pressures such as rising health care costs -- reports had them rising 6.1% this year, or more than double the rate of inflation. As a result, the national savings rate remains near zero.

Both Obama's and Romney's plans offer political candy, but neither of their plans proves sound fiscal policy. Voters and taxpayers alike should be wary of politicians making promises without sound economic policy behind them.