Monday, September 10, 2012

Princeton Study Endorses Romney Tax Plan as "Not Mathematically Impossible"

When questioned about Romney's tax policy being revenue neutral by Norah O'Donnell on CBS "Face the Nation," Paul Ryan replied, "So one study from Princeton just said that we can accomplish exactly what we're saying... which is broaden the base, lower rates."

Henry S. Rosen's paper "Growth, Distribution, and Tax Reform" notes that "the Romney proposal is not fully articulated" and constructs a scenario based on a series of assumptions.

Under the 2012 tax baseline, assuming Romney's plan generates 3% greater growth, those earning $200,000 and above would pay "about $29 billion (or 6.5 percent of current revenues) more in taxes."

Under the 2013 numbers, assuming Romney's plan generated 5% greater growth, he states, "It seems fair to say that if the scheduled tax increases for 2013 actually went into effect and the definition of 'high income' excludes people with 6-digit incomes below $200,000, then under the Romney proposal, maintaining an approximately constant tax burden on high-income individuals would be more challenging. But I imagine that doing so would not be mathematically impossible."