Romney Will Raise Taxes, Private Equity Argues
On Monday, two new polls show the president firmly ahead of the former Massachusetts governor in a theoretical general election.
"Governor Romney believes the right way to close the budget deficit is to keep tax rates low and bring federal spending back down to historical averages below twenty percent of GDP," said Romney spokeswoman Andrea Saul to questions on Romney's ability to simultaneously cut the national debt and taxes. "He is categorically opposed to tax increases and believes they should not be on the table," added Saul.
"I think if he is elected [Romney] will hold to his promise on marginal tax rates," says Chris Edwards of the Cato Institute, a libertarian think tank.
Edwards says he thinks that there's no reason for marginal tax rates to rise because new CBO data found that even if the Bush tax cuts and the alternative minimum tax relief were extended, federal revenues as a percentage of GDP would rise in coming years.Edwards however says he fears a President Romney would do other things to raise revenues, such as reducing reductions, credits and exemptions. He points to the Bowles-Simpson plan that cuts back on the mortgage interest deduction, health care exclusion and other loopholes. In a January New Hampshire debate, Romney seem to endorse major aspects of the plan. Another revenue raising alternative would be a silent hike of the marginal tax rate through inflation, says Paul Ashworth, chief U.S. economist at Capital Economics. "If you don't index the marginal rate dollar thresholds for inflation then gradually more people will fall into the higher rate brackets naturally... This is exactly what has been allowed to happen to the AMT this year," says Ashworth. Because of careful phrasing and the potential for non-income related tax increases, Romney's balanced budget plan isn't yet in "voodoo" territory. Still to be seen is whether the campaign primaries will force Romney to commit outright to cutting the debt and taxes during his presidency. The paradox between Romney's criticism of the growing government debt and potential tax increases under President Obama and his own policies are sure to be at the forefront of general election debates. -- Written by Antoine Gara and Joe Deaux in New York
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