The Buffett Rule is Nothing Compared to the Romney Windfall
With its general election opponent now certain, the Obama campaign this week has been highlighting the Buffett Rule, the Democratic proposal for those earning over a million dollars a year to pay a minimum 30 percent tax. And with good reason. After all, having paid only 13.9 percent to Uncle Sam on $45 million in income over the last two years, Mitt Romney is the poster child for unfairness in the tax code.
But as the White House admits, even if President Obama gets his way the Buffett Rule will make only a small dent in the U.S. national debt by raising $47 billion in new revenue over the next decade. On the other hand, if President Romney enters the Oval Office, the U.S. Treasury will hemorrhage trillions in red ink, much of it delivered to the wealthiest Americans who need it least. With its proposed 20 percent across-the-board tax cut and elimination of the estate tax, the Romney Windfall would reward the stratospherically rich, among them one Willard "Mitt" Romney.
At a time of record income inequality and the lowest federal tax burden in 60 years, Mitt Romney would produce a massive payday for the gilded-class. As the Center for American Progress explained in January, Romney would hand over 60 percent of the benefits from his tax cuts to the top one percent of earners. And that analysis was done before the former Massachusetts Governor resurrected Bob Dole's failed 1996 tax plan by proposing a 20 percent across-the-board cut on top of the extension of the Bush tax cuts. As ThinkProgress summed it up:
Romney's claim that his plan would promote job and economic growth while reducing the deficit is also likely false. The Bush tax cuts were promoted under the same guise, only to blow a $2.5-trillion hole in the federal budget that was accompanied by worst performance of any post-war expansion" for growth in investment, GDP, and job creation. Romney's tax cuts are even more expensive, clocking in at a cost of more than $10.7 trillion over the next decade and reducing revenue to a paltry 15 percent of GDP, according to Linden. Balancing the budget on those terms, as Romney claims he will do, would be next to impossible.
Impossible, that is, because Romney refuses to name a single deduction or loophole he would close, tax expenditures that cost the Treasury $1 trillion a year. His economic adviser Glenn Hubbard admitted Romney's cowardice, explaining "it is not his intention to take on any specific deduction or exclusion and eliminate it." For that reason, Romney claimed, no one can say whether his proposals would add to the national debt:
"So I haven't laid out all of the details about how we're going to deal with each deduction, so I think it's kind of interesting for the groups to try and score it, because frankly it can't be scored, because those kinds of details will have to be worked out with Congress, and we have a wide array of options."
As it turns out, Romney's scheme to "Cut, Cap and Balance" the federal budget does nothing of the sort. As the Washington Post explained in its discussion of an analysis by the Committee for a Responsible Federal Budget, "until the campaign offers a more specific plan, Budget Watch analysts said Romney's entire framework would add about $2.6 trillion to the debt by 2021." As a percentage of the U.S. economy, over the next decade that far exceeds the debt projections for President Obama's budget:
But the well-to-do won't merely get a Willard Windfall by having their income tax rate lowered from 35 to 28 percent. Their heirs will be even bigger winners, if President Romney as promised ends the estate tax.
That tax is currently paid by less than a quarter of one percent of American estates each year. Despite Republican mythology to the contrary, the Tax Policy Center reported that in 2009 fewer than 2,700 family farms and businesses owed the tax to Uncle Sam. But thanks to successful Republican brinksmanship, the December 2010 tax cut compromise lowered the rate from 45 percent to 35 percent while boosting the estate tax exemption to $10 million per couple. Now, Mitt Romney wants to make sure those 40 richest estates estimated to now pay the tax each year could keep billions of dollars away from the federal government.
And among those 40 estates would be his own. With President Romney zeroing out the estate tax, his five sons and 17 grandchildren would get a golden shower when their grandparents Mitt and Ann leave the scene. Their payday courtesy of all other American taxpayers could reach $84,000,000 (that is, 35 percent of $240 million).
Of course, thanks to Mitt's machinations to skirt the IRS, the real Romney "death tax" savings will be much less. After all, thanks to some (apparently legal) chicanery on the part of his former employer, Bain Capital, Mitt has accumulated an IRA worth a reported $100 million. (The Romney camp even complained about that, worrying that recent tax code changes has "created a tax problem" for the former Massachusetts governor and asking, "Who wants to have $100 million in an IRA?") In addition, Mitt has already established a $100 million trust fund for his five sons (the ones who, he explained five years ago, instead of joining the military "are showing support for our nation [by] helping me get elected because they think I'd be a great president"). That might explain why Mitt's son Matt hardly broke a sweat about the $45 million of the Romney fortune his dad sank into his failed 2008 presidential run:
"I don't ever expect to see any of that anyways. I don't think any of us kids are counting on that money. If my dad decides to use the money he's made, then we support him."
Especially if Matt's dad becomes president. If that happens, the Romney clan won't just get a whopping return of his $45 million investment. They and the other denizens of the country club set will reap the federal budget-busting Romney Windfall every year.