Citerank: (9) 231177Need for excess savingsTo avoid an impractical "sudden death" cutoff at some income level (say $200,000) tax preferences would need to have a phase in. This would add to the cost and require identifying high-income tax preferences worth more than needed to eliminate the TPC's claimed $86 billion shortfall.1198CE71, 231226Obamacare inclusionThe revenue baseline is inflated. The TPC included in its baseline Obamacare taxes which Romney has not pledged to offset. This point is conceded by some defenders of the TPC analysis such as Josh Barro (see citation).13EF597B, 231236Life insurance concessionsSome TPC defenders are prepared to concede this one could be back on the table.1198CE71, 231238Savings overstated13EF597B, 231460A different planA tax proposal which deemed income above $100,000 high is a different proposition from the one Romney has actually advanced which aims to shield earners below the $200,000 threshold.13EF597B, 231567Revenue baseline understatedAccording to one critic Rosen failed to include in his estimate of the revenue that would need to be generated from base-broadening allowance for Romney's proposals to repeal the Estate Tax and Alternative Minimum Tax.1198CE71, 231568Micro-behavioral offsetsOne of the authors of the TPC analysis argues that Rosen expects taxpayers to adjust their behavior to rate cuts, but fails to do so in a symmetrical fashion for reduced tax concessions. These would offset revenue gains from the former.1198CE71, 232174Micro-behavioral offsetsOne of the authors of the TPC analysis argues that Rosen expects taxpayers to adjust their behavior to rate cuts, but fails to do so in a symmetrical fashion for reduced tax concessions. These would offset revenue gains from the former.1198CE71, 233432Broadening effectsThe authors state they have not included in their model any estimation of the effects of base broadening - since these have not been specified by Romney. But this presumes they have no bearing on incentives. One of the TPC authors raised this in response to Rosen (see citation below)13EF597B

5. Next up is a paper by Curtis Dubay of the Heritage Foundation. Dubay raises the same issues as Brill on municipal bond interest, life insurance and economic growth. He adds another claim: Romney would likely change the rules about capital gains tax treatment on estates, raising additional revenue.

Currently, when you die, your heirs receive a "step-up," with the value of your assets determined at the time of your death. Say you bought your home for $100,000, it was worth $200,000 when you died and your heir eventually sold it for $250,000. Your heir would only owe capital gains tax on a gain of $50,000; the other $100,000 of gains would go untaxed. This is often described as an offset for the estate tax.

Dubay assumes that, when repealing the estate tax, Romney would adopt "carry-over" basis, meaning your heir would assume the gains accrued during your lifetime and pay tax on the entire gain when he sells those assets. Dubay says this would raise $19 billion annually from people earning over $200,000.

But that's wrong. Dubay is citing a report from the Office of Management and Budget that compares the current step-up basis rules to a regime in which accrued capital gains are taxed immediately upon death. Though Dubay has protested that this isn't so, you can see it plainly in footnote 74 on page 272 of the OMB report.

I have not seen an estimate of the revenue impact of moving to carry-over basis at death, but it would surely be much less than the revenue impact of forcing the realization of capital gains at death.

Footnote 74

Under the baseline tax system, unrealized capital gains would be taxed when assets are transferred at death or by gift. In contrast, capital gains on assets held at the owner’s death are not subject to capital gains tax under current law. The cost basis of the appreciated assets is adjusted to the market value at the owner’s date of death.