SALT LAKE CITY — Economists are battling over whether Mitt Romney’s tax plan is actually possible after a recent Wall Street Journal column written by Martin Feldstein, a professor of economics at Harvard and the presidential candidate’s economic adviser.
Feldstein refuted the Tax Policy Center’s study, which claimed that Romney’s plan is “mathematically impossible.” The study also claimed the plan would cause a $181 billion revenue loss if changes didn’t spur economic growth.
If a 30 percent tax rate were applied to deductions from taxpayers earning more than $100,000 in 2009, which totaled $636 billion, there would be $191 billion in extra revenue, according to Feldstein’s article.
The Tax Policy Center responded to Feldstein’s article in a recent blog post, claiming the economist confirmed the organization’s findings rather than refuting them.
Eliminating itemized deductions for taxpayers earning between $100,000 and $200,000 “would raise more in taxes from people in this group than they would save from the rate reductions and other specified features of Governor Romney’s plan,” the organization states in its post.
“While his results confirm our earlier finding, Feldstein employs several questionable assumptions that understate the revenue loss of Governor Romney’s tax cuts and overstate the revenue gains from reducing tax breaks and deductions,” the Tax Policy said.
Feldstein lashed back at the Tax Policy Center’s rebuttal in a post on his colleague Greg Mankiw’s blog.
The economist acknowledged objections critics have raised, like the 30 percent marginal tax rate being too high.
“While I still believe the assumptions that I used in my analysis, I can modify them as suggested by the critics and still support my original conclusion by broadening the tax base in ways suggested but not developed in my WSJ piece,” Feldstein said in his response.
Other economists, like U.C. Berkeley’s J. Bradford Delong, have also chimed in on the debate.
“If the maximum marginal tax rate is 28 percent, you cannot cut $1 of itemized deductions and increase revenue by 30 cents,” Bradford said on his blog. “It is not possible. The assumption that you can is unbelievable. Nobody should believe it.”