WASHINGTON -- Over the past few weeks, the Romney campaign has repeatedly pointed to five separate studies supporting the candidate's contention that a dramatic, across-the-board, reduction in tax rates can be paid for by economic growth and the elimination of deductions and exemptions for high-income earners.
Romney himself referenced these five studies in an interview with Meet the Press on Sunday. His running mate, Rep. Paul Ryan (R-Wis.), said the same during his run through the Sunday show circuit.
A closer examination, however, calls into question the fact that there are even five studies at all. Last week, the Romney campaign passed along the five documents that the candidate had referenced on NBC's Meet the Press. Three of the five are blog posts or op-eds (as opposed to academic literature), and two of those three are written by the same author: Harvard economist Martin Feldstein.
Of the remaining two studies, one is the tax reform white paper authored by Romney-backing economists and paid for by Romney for President, Inc. (in an email to PolitiFact, the Romney campaign highlighted several Wall Street Journal editorials in place of the campaign white paper as the "fifth" study).
The final study, produced by Princeton University's Harvey Rosen, backs the Romney campaign's assertions by arguing that people will work more, accumulate more income, pay more taxes, and seek out fewer loopholes if their tax rates are lowered. But even that report has several nuances that complicate the candidate's use of it.
Romney is not without philosophical support with respect to his tax plan. The Wall Street Journal editorials that his campaign sent PolitiFact, for one, argue that sharp reductions in tax rates will spur economic growth, which, in turn, will allow for increases in tax revenues. Those pieces have helped the campaign push back on a critical study by the Tax Policy Center, which concluded that Romney would have to eliminate tax deductions on things like home mortgage interest payments, charitable donations, and employer-provided health insurance in order to have his plan be deficit-neutral.
But even Feldstein has said that to make Romney's math work, some of those deductions would have to be eliminated on incomes over $100,000. In his August 28 Wall Street Journal piece, what Romney calls a "study," Feldstein writes that Romney could generate $191 billion by scrubbing these deductions, "more than enough to offset the revenue losses from the individual tax cuts proposed by Gov. Romney."
In other words, the economist who has written two of the five studies that the Romney campaign highlights has conceded that Romney would have to eliminate tax preferences for people making over $100,000 per year in order to make his plan work. And yet, when asked in an interview with "Good Morning America" on Friday morning if he would remove those deductions and exemptions for incomes over $100,000, Romney said "no."
"That’s not what I propose," he said. "And, of course, part of my plan is to stimulate economic growth. The biggest source of getting the country to a balanced budget is not by raising taxes or by cutting spending."
The statement follows months of refusals from the Romney campaign to actually detail what kind of deductions and exemptions the candidate would seek to eliminate once in office. George Stephanopoulos, hosting GMA, pushed back, noting that Romney was now actually distancing himself from a study he routinely cites as supportive.
Romney responded by saying he hadn't "seen [Feldstein's] precise study" but that there were five studies in total "that point out that we can get to a balanced budget without raising taxes on middle income people." Romney would define middle income as $200,000 to $250,000 per year and lower.
With that measure of middle class, Princeton economist Rosen's study may still suffice. Rosen argued that Romney could get his tax plan to deficit neutrality by eliminating deductions for income over $200,000 a year. But in a separate interview with Reuters on Friday, he seemingly revised that figure downward to $100,000 per year
"What the political system would find feasible, I don’t know,” Rosen said. “It’s mathematically possible."
Even then, there are questions that surround the study's conclusions. Rosen depends on assumptions that he acknowledges are not made by the Treasury Department or the Congressional Joint Committee on Taxation about how high-income earners respond to changes in tax rates. Unlike those government bodies, he assumes that the wealthy will not seek to take advantage of as many tax loopholes if their overall tax rate is lower. More importantly, he assumes that Romney's tax plan will grow wage and capital income by at least three percent. This could be viewed as an aggressive assumption. Under President Bush, the entire economy (not just tax policy) resulted in total personal income growth that varied between 2.8 percent and 6.7 percent.
Romney may agree with Rosen's data when it comes to wage growth. But he is now on record opposing the idea that certain exemptions and deductions would need to be eliminated above a $100,000-a-year threshold in order to make the plan work.
The situation seems to leave the Romney campaign with supportive economists, but no purely supportive academic study.
In addition to Rosen's work and Feldstein's two articles, the Romney campaign has highlighted a post by Matt Jensen of the American Enterprise Institute. But that post is primarily a rebuke of a small sliver of the Tax Policy Center analysis -- Jensen argues that, contrary the TPC, Romney could get tens of billions in revenue by eliminating the exclusion of interest on tax-exempt bonds and interest on life insurance savings. The Romney campaign's own white paper, authored by Romney-backing economists, doesn't attempt to lay out how mathematically his plan will work. Instead, it says that the former governor will "broaden the base to ensure that tax reform is revenue neutral."
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