Newt Gingrich asked a good question of Mitt Romney last night and did not get a good answer: Why cut capital-gains taxes only for people making less than $200,000? Romney’s answer was that he wants to help the middle class, which is a bit of a non sequitur since cutting capital-gains taxes for the middle class isn’t going to provide much succor.
In the course of his answer Romney said, “And so if I’m going to use precious dollars to reduce taxes, I want to focus on where the people are hurting the most, and that’s the middle class.” I’m of two minds about this comment. On the one hand it does seem to presuppose–does it not?–that the money belongs to the government and is its to distribute as it sees fit. On the other hand practically speaking tax cuts do compete with each other. Given a targeted range of spending and deficits (based on, among other things, political constraints), a dollar in revenue forgone because of a cut to dividend taxes is a dollar of ordinary income taxes that cannot be sacrificed. And priorities do have to be set.
I’d approach the setting of those priorities differently than Romney does. I’d want to identify the appropriate level of revenue. Then I’d determine the least socially damaging way of raising it, with very little attention to getting the “right” percentage of the tax burden paid by the middle class or the rich. Finally I’d decide which steps to get closer to that tax code are most important to take.
But being of two minds about the cast of mind revealed by Romney’s comment, I thought commenters might offer some help.