Romney’s tax plan: You still can’t drive cross country in 15 hours without speeding

Bill Gale devised an awesome analogy for the Romney middle class tax increase debate:

Suppose Governor Romney said that he wants to drive a car from Boston to Los Angeles in 15 hours. And suppose some analysts employed tools of arithmetic to conclude that “If Governor Romney wants to drive from Boston to LA in 15 hours, it is mathematically impossible to avoid speeding.” After all, the drive from LA to Boston is about 3,000 miles, so to take only 15 hours would require an average of 200 miles per hour. Certainly other road trips are possible — but the particular one proposed here is not.

Especially in this inflamed campaign environment, one can imagine the frenzied responses. The Obama campaign might put ads out that say Romney wants to speed or is going to speed. Romney’s campaign might respond by saying the study is a “joke” and “partisan,” that he supports speeding laws and would never, ever speed, and it is ridiculous to suggest that he would. The Romney campaign and its surrogates might say that the analysts must be wrong because they don’t even know what his road plan is or which car he would drive. Besides, Romney never really said he wanted to go LA, he might want to go somewhere closer; he could get to LA without speeding if he took more than 15 hours; he could get somewhere else in 15 hours without speeding. And so on.

With a few substitutions, this is almost exactly how the tax debate has evolved. Substitute “the various tax cuts Romney has proposed” for “driving from Boston to LA;” substitute revenue-neutrality for “in 30 hours; substitute “tax increases on households with income below 200k and tax cuts for higher income households” for “speeding” and you have the basic story: Romney can’t do all of the tax cut proposals he has advocated, remain revenue neutral, and avoid taxing households with income below $200,000 or cutting taxes for higher income households.

Substitute “the full Romney tax plan” [which, by the way, does not exist] for the choice or road plan or car and you have the common complaint “how can you evaluate the specific proposals when the overall tax plan is not even fully specified?” The answer to which is that even with incomplete information, there is enough to understand some of the implications.

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About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar. http://faculty.chicagobooth.edu/owen.zidar/index.html
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