Here It Is, the World’s Simplest Tax Analysis

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

Earlier today I promised you that an analysis of Mitt Romney’s tax plan from last night would be a lot easier than an analysis of his earlier plan. As you recall, Romney’s previous proposal was to cut rates 20% across the board and eliminate deductions to make up for it. This means you have to model all the various deductions currently in the tax code and figure out how much each one is worth. Then you get into endless arguments about whether your model is right, which deductions are “on the table,” etc. etc. In the end, it’s your study vs. my study and may the best man win.

Romney’s new plan slices through this Gordian knot by simply capping the total level of deductions at $25,000. It doesn’t matter which deductions you take or how much they’re worth. You just assume a $25,000 cap and you’re done. No details needed. Easy peasy.

So here it is, the world’s simplest tax analysis. Based on studies from the Tax Policy Center (rate cuts here, deductions here), it’s an estimate of the effect of Romney’s plan on tax revenue in the year 2015:

  • Tax loss from the 20% rate cut: $360 billion
  • Tax increase from the $25,000 deduction cap: $103 billion

Is this still too complicated? The colorful graph on the right should make everything clear. Romney is $257 billion short, and the rest of his plan (eliminating the estate tax, eliminating investment taxes for middle-income earners, lowering the corporate tax rate) just makes things even worse. One way or another, Romney has a whole slug of revenue he needs to make up. His plan just doesn’t add up.

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate