‘Tax Me,’ Mitt Romney Says, Pointing at You

His proposals begin with a huge hike on salarymen—strivers who earn income of the sort he doesn’t

By Clifford Asness and Michael Mendelson. Excerpts:

"Mr. Romney’s lead idea is to eliminate the income limit on the Social Security payroll tax. He imagines that a huge 12.4% hike to the marginal rate on an essential cohort of the striving will have a “relatively small impact on economic growth.” Moreover, this whopping increase in social-insurance premiums wouldn’t come with better coverage. Mr. Romney would largely sever the link between Social Security contributions and benefits."

"The problem is that the “loopholes” mostly are intentional and sometimes created by necessity to avoid punitive, growth-killing double taxation. One of them, the deductibility of state and local taxes, already was eliminated for wealthy (and many not-so-wealthy) taxpayers in 2017, though partially reinstated since for some of the not-so-rich."

"Another “loophole” is the step-up on death of the basis for appreciated assets, which shields them from capital-gains taxes. But without the step-up, estates subject to the death tax would face double taxation, on both the gain and the estate. For the very wealthy—the few actually subject to an estate-tax hit—this isn’t a loophole, it’s abuse prevention."

"The bigger issue with Mr. Romney’s proposals is that they ignore two inescapable truths. First, that current tax rates can’t support the entitlement spending currently required by law, let alone satisfy persistent demand to expand it. Second—our biggest beef with his essay—you can’t pay for the government that has been promised without large middle-class tax increases. The very wealthy aren’t so rich that 10,000 or 20,000 of them can pay for the shortfall in programs designed for the other 340 million. The problem with the 0.01% that Mr. Romney clearly wants to target (though often misses) is that there are only 0.01% of them. That’s why Mr. Romney pitches it as taxing him, yet he leads instead with a whopping FICA tax on 10 million successful but not yet wealthy Americans."

"Jared Bernstein commented, “Ultimately we can’t raise the revenue we need only on the top 2%.”"