This morning on CNN, Robert Greenstein, of the Center on Budget and Policy Priorities, assessed the tax plan Senator Pat Toomey offered during the supercommittee negotiations, but managed to significantly distort the plan itself. Toomey’s plan proposed to lower rates, including cutting the top rate to 28 percent, and limit a range of deductions. Greenstein essentially focused on what the cut in the top rate would mean, while ignoring the fact that Toomey’s plan would cut rates proportionally for all brackets.
Toomey has denied that his plan would result in higher taxes on anyone making less than $200,000 a year, but Greenstein implies this would be the case, and, when pushed on it, reverts to reminding everyone that Toomey’s top tax rate of 28 percent is a “huge tax cut at the top.” He then cites “all of the studies of plans like Senator Toomey’s,” which apparently show that not enough money is saved by limiting deductions on wealthier taxpayers in order to make up for revenues lost from lowering the top rate. Thus, he argues, rather circuitously, that Toomey’s plan must inevitably involve a tax hike on the middle class, if it claims to be revenue neutral, because other plans have done so — which doesn’t say anything about the actual merits of Toomey’s plan.
Furthermore, Greenstein also attempted repeatedly to hit Toomey for “limiting” various deductions, including the child tax credit and the mortgage deduction, claiming that this would raise taxes unacceptably on the middle class. However, Toomey’s plan, as presented to the supercommittee, specifically would prevent tax increases on anyone not in the top two income brackets (above approximately $170,000 for a single person, approximately $200,000 for those married filing jointly).
Toomey’s plan, rather than a broadly scything tax cut for the wealthy, represents a serious attempt at the tax-reform ideal, lowering rates and eliminating distortionary deductions, which is why it received substantial praise from both sides of the aisle in the Senate.