Here is what FactCheck.org has concluded:
Biden falsely claimed that Romney has “another tax cut coming” that “will, in fact, give … $250,000 a year” to millionaires and “raise taxes” on middle-income families by $2,000 a year. That’s not true. Biden is citing the work of a nonpartisan group that has said the Obama campaign has misinterpreted its study.
For his part, Ryan claimed that “six studies have verified” that Romney’s tax plan is mathematically possible — that it can reduce income tax rates by 20 percent across the board and offset the loss of revenues by reducing or eliminating tax deductions without benefiting the wealthy or increasing the deficit. But Ryan inflates the number of “studies” by including blog items and the work of campaign advisers.
Biden: They’re holding hostage the middle class tax cut to the super wealthy. And on top of that, they’ve got another tax cut coming that’s $5 trillion that all of the studies point out will in fact give another $250 million — yeah, $250,000 a year to those 120,000 families and raise taxes for people who are middle income with a child by $2,000 a year.Biden is referring to an August study by the nonpartisan Tax Policy Center. It’s true that the report (page 19) calculates that those in the top 0.1 percent of taxpayers would receive a $246,652 net tax break. It also says on page six that “taxpayers with children who make less than $200,000 would pay, on average, $2,000 more in taxes.”
But it is not a study of Romney’s plan. It is an exercise in trying to determine if a “revenue-neutral individual income tax change that incorporates the features Governor Romney proposed” could be revenue neutral without benefiting the wealthy.
Director Donald Marron disagrees with Biden’s interpretation of the study.
“I don’t interpret this as evidence that Governor Romney wants to increase taxes on the middle class in order to cut taxes for the rich, as an Obama campaign ad claimed,” Marron wrote. “Instead, I view it as showing that his plan can’t accomplish all his stated objectives. One can charitably view his plan as a combination of political signaling and the opening offer in what would, if he gets elected, become a negotiation.”
Ryan seeks to discredit the Tax Policy Center’s study by claiming, falsely, that six studies prove Romney’s tax plan can accomplish all of its goals.
We wrote about this before when Romney and Ryan referred to “five different studies.” At that time, we wrote that one of those “studies” was a blog item (not a study), one was a campaign white paper coauthored by Romney’s chief economic adviser, and one was a newspaper op-ed written by yet another campaign adviser who later updated his calculations in a blog item. Romney and Ryan counted the updated blog item as a “study.”
The fifth study was written by Harvey Rosen, a Princeton economics professor who once served as chairman of President George W. Bush’s Council of Economic Advisers. Rosen assumes Romney’s tax plan would add an extra 3 percent to the economy — an assumption that Rosen calls “reasonable.” But Romney’s plan is designed to be revenue neutral, so it would not reduce the tax burden on the economy and, presumably, would have less of a growth effect. Bush’s large tax cuts in 2001 and 2003, for example, did reduce the overall tax burden and yet the year-to-year changes to the real GDP were just over 2 percent.
The latest study cited by the Romney campaign comes from Alex Brill, a research fellow at the conservative, pro-business American Enterprise Institute. Among Brill’s assumptions: Romney could raise revenue by taxing the interest income from state and local bonds and the investment income of life insurance contracts. Both are currently not subject to federal taxes. But, as the Washington Post points out, “taxing interest on state and local bonds or on the value in life insurance policies, for example, would violate Romney’s preference for preserving low taxes on savings and investment.”
William Gale, a coauthor of the Tax Policy Center’s study, told the Post that Brill proves his point: that Romney’s plan cannot be accomplished unless “you give up on some of the goals.”