Voodoo Economics: growth by lowering tax rates while also raising revenue by limiting deductions [View all]

[Texas Lawyer]

Willard promises "I am not reducing taxes on high-income taxpayers," but then he says he would "bring our rates down to encourage growth, [but] keep revenue up by limiting deductions and exemptions." Willard also promises that his undisclosed change in tax policy would "remain revenue neutral" and yet somehow also "create an enormous incentive for growth in the economy." link: http://www.msnbc.msn.com/id/48959273/ns/meet_the_press-transcripts/#.UGxYpVHMPh8

The only detail we have is Willard's vague proposal to impose a $17,000 limit on deductions that "you could use your charitable deduction, your home mortgage deduction, or others — your health care deduction." link: http://www.newsday.com/news/nation/mitt-romney-suggests-cutting-mortgage-interest-deduction-on-eve-of-presidential-debate-1.4066809

This is nonsense. If the elimination of loopholes and deductions and exemptions exactly balances the cut in tax rates, as must be the case if this change is as "revenue neutral" as Willard promises, such a neutral change would do nothing to encourage or discourage growth because it would be a neutral change.

If this were a revenue neutral change, it would not offset any meaningful reduction in the tax rates and -- even if it did -- how would that possibly create the promised "enormous incentive for growth in the economy"? This would not encourage economic growth; it would crush the recovery of the housing market.

Don't let Willard get away with Voodoo Economics!