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| Micro-behavioral offsets SupportiveArgument1 #232174 One 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. | Note that this same point has also been cited in opposition to Martin Feldstein's analysis (follow cross-link). |
+Citations (2) - CitationsAdd new citationList by: CiterankMapLink[1] The Final Word on Mitt Romney’s Tax Plan
Author: Josh Barro - Bloomberg blogger
Publication info: 13 October 2012
Cited by: Peter Baldwin 5:23 AM 25 October 2012 GMT
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, 231564Assumes acrrued gains taxed on deathBarro says Dubay gets it wrong on the revenue gain from moving to a carry-over basis. This is because the OMB estimate that Dubay relies on presumes gains would be taxed on an accruals basis immediately upon death, as stated in a footnote (see citation).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, 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 URL:
| | Excerpt / Summary Gale emails:
Rosen discusses and includes the effects of how taxpayers adjust their activities in response to lower tax rates (“micro behavioral” responses to tax rate cuts, which tend to reduce the revenue loss) but he neglects to include similar effects for how taxpayers respond to base-broadening measures. For example, he does not allow for the possibility that taxpayers with mortgages would likely choose to pay down their mortgages with taxable assets (and thus reduce taxable investment income) if the mortgage interest deduction were removed. |
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