Superwonk Bob Greenstein at CBPP hits back at Pat Toomey, and it is just devastating. Greenstein demonstrates that you can’t do all the things Toomey says his tax plan would do without raising taxes on people making less than $200,000:
Senator Pat Toomey (R-PA) pounced on CNN’s Soledad O’Brien this week when she raised findings from an analysis that CBPP issued last fall of the tax plan that the Senator proposed to the congressional “Supercommittee.” Senator Toomey asserted that a finding that O’Brien cited — that his tax plan would raise taxes on people making less than $200,000 — was “factually wrong and ridiculous.”
Really? Let’s take a look:
In presenting his plan to the Supercommittee, Senator Toomey indicated it would:
- Cut tax rates below the levels of President Bush’s tax cuts, setting the top rate for high-income households at just 28 percent;
- Limit “tax expenditures” (credits, deductions, and other tax preferences) using a model developed by leading economist Martin Feldstein;
- Leave the current preferential tax rate for capital gains in place; and
- Produce $290 billion in increased revenues for deficit reduction.
It is impossible to do all of these things without raising taxes on people below $200,000. Consider:
- The Urban Institute-Brookings Institution Tax Policy Center (TPC) has estimated that the reductions in tax rates that Senator Toomey proposed would cost $268 billion in 2015 alone, with $137 billion of it going to people over $200,000. (These estimates assume a corresponding reduction in the tax rate under the alternative minimum tax, or AMT. If policymakers do not enact that corresponding reduction, the number of taxpayers subject to the AMT would double to more than 13 million — a result that Senator Toomey surely does not intend.)
- TPC also has estimated that a Feldstein-like tax-expenditure limit on people making over $250,000 would raise only $48 billion in 2015, meaning that higher-income households would receive a large net tax cut — they would gain much more from the tax-rate reductions than they would lose from the tax-expenditure limit. (TPC did not provide this estimate for people over $200,000, but the TPC figures make clear that those over $200,000 would receive a substantial net tax reduction.)
The math is irrefutable. Senator Toomey told O’Brien that, while reducing their deductions and credits, he also would cut tax rates for people below $200,000 so that they would face no net tax increase. But that can’t be. If the tax plan is supposed to produce a net increase in revenues, and if it loses revenue from people making over $200,000, then it simply must raise revenue from people making less than $200,000.