Mitt Romney and Paul Ryan have been remarkably evasive about the details of their tax plan which calls for reducing the marginal tax rates by 20% (which reduces revenue) but also reducing or eliminating deductions and loopholes (which raises revenue).
They are not specifying what each number is but deny that the reduction in rates will cost $480 billion per year (nearly $5 trillion over ten years) as estimated by the well-regarded Tax Policy Center. They have also refused to specify what deductions and loopholes are on the cutting block. They have simply asserted that their plan is ‘revenue neutral’, meaning that that the cost of the reduction in tax rates exactly equals the increase gained by their actions on deductions and loopholes.
Critics have charged that there is no way that the increased revenue can compensate for the tax cuts, the numbers simply don’t add up (or cancel out in this case), and the evasions by the Romney-Ryan camp suggest that this charge has some merit.
Bu suppose we take their claims at face value. If there is no net gain or loss to the US treasury, then it will neither reduce the deficit nor be a fiscal stimulus to the economy. Then what is the point of this tax plan? Why would anyone care if their federal income tax rates go down while their deductions get reduced so that they end paying the same net tax?
The only reason for such a plan is that although there is no net gain or loss to the treasury, some classes of people will pay more and the other classes pay less. So who will be the winners and losers? Maybe that is the question that should be posed to them when they deflect questions about the details by saying that their plan is revenue neutral.