The Ten Biggest Differences between the Romney and Obama Tax Plans

By :: October 23rd, 2012

When it comes to taxes, Mitt Romney and Barack Obama are almost perfect mirror images of one another. Here are ten ways their tax plans are different.

  1. Romney’s tax agenda is ambitious and opaque. Obama’s is modest but relatively transparent.
  2. Obama has shown little interest in broad-based tax reform. Romney wants to fundamentally rewrite the revenue code.
  3. Romney wants to cut tax rates across the board. Obama wants to raise rates for high-income households.
  4. Obama wants to hike taxes on the wealthy. Romney does not.
  5. Obama believes that tax increases on high-income households are a key piece of deficit reduction. Romney would not use even a penny of new revenues to help shrink the deficit.
  6. Romney believes that low tax rates will generate enough economic growth to jumpstart the economy. Obama does not.
  7. Obama would preserve tax preferences for green energy. Romney would eliminate them.
  8. Romney wants to cut taxes on investment income. Obama would raise them.
  9. Obama would extend the 2009 expansion of tax credits for low- and moderate-income families.  Romney would let them expire.
  10. Romney would shift the corporate tax to a territorial system in which domestic firms owe no U.S. income tax on their overseas sales but foreign firms pay U.S. tax on money they make here. Obama would continue to impose U.S. tax on foreign earnings of domestic firms, and make it tougher for those companies to avoid tax by keeping their profits overseas.

The two men do have a few things in common. Both want to cut the corporate tax rate, though Romney would cut it more. Romney would permanently extend all of the 2001-2003 tax cuts while Obama would continue nearly all of them. Both men would let the 2010 payroll tax reduction expire as scheduled in January. And both apparently believe that households making up to $200,000 or $250,000 are middle-income.

But those differences are small compared to the candidates’ vastly different visions of what the revenue code should look like.  On taxes, at least, voters have an important choice to make in a couple of weeks.

 

 

 

33Comments

  1. Ryan Sharpe  ::  4:22 pm on October 23rd, 2012:

    Why not get rid of corporate tax completely?
    http://n.pr/RwXyvr

  2. Jack B  ::  5:02 pm on October 23rd, 2012:

    I agree, get rid of corporate tax and tax dividends at earned income rate.

  3. AMTbuff  ::  7:52 pm on October 23rd, 2012:

    “Romney believes that low tax rates will generate enough economic growth to jumpstart the economy. Obama does not.”

    What will jumpstart the economy is a credible plan to avoid default on the US debt and/or hyperinflation. Until then any recovery is likely to be weak and short in duration. The election of Ryan will provide a temporary lift which will reverse if no serious reform to spending promises is forthcoming.

    Some economists have drawn attention to Uncertainty as a major factor depressing economic activity. I don’t think they realize the extent to which the prospect of fiscal collapse forms the core of this Uncertainty.

  4. Vivian Darkbloom  ::  3:40 am on October 24th, 2012:

    Howard is not up to date on Obama’s plan. Under pressure to release details for his agenda in a new term, the Obama campaign released a new tax and budget plan yesterday. That plan also conveniently contains a comparison between Romney’s “opaque” plan and Obama’s new, “transparent” one. Howard linked to old stuff that suggests he’s looking backward, not Forward. The comparison of Romney’s plan with the new “Forward” plan does not look anything like the one Howard has posted above. You can find the latest here: http://www.barackobama.com/plans/taxes-budget

    I hope the TPC can come up with a revenue estimate and critique of that plan before the election.

  5. Michael Bindner  ::  8:29 am on October 24th, 2012:

    The big difference is that we can trust Obama to stay reasonably close to his proposals and convictions. No such faith can be put in Romney’s word on this, or any other, issue. If a Democratic Congress sent Romney Obama’s tax plan, he would likely sign it.

  6. Brad DeLong  ::  9:53 am on October 24th, 2012:

    “Ambitious but opaque”? Don’t you mean “incoherent and inconsistent”?

  7. Tax Roundup, 10/24/2012: Despite the Yankees, New York is #1! « Roth & Company, P.C  ::  10:13 am on October 24th, 2012:

    […] Howard Gleckman,  The Ten Biggest Differences between the Romney and Obama Tax Plans (TaxVox) […]

  8. A Simple Comparison between Romney and Obama’s Tax Plan | Tant-on-Taxes  ::  8:47 pm on October 24th, 2012:

    […] A Simple Comparison between Romney and Obama’s Tax Plan […]

  9. Amy Weintraub  ::  2:29 am on October 25th, 2012:

    Vivian, the President has had 4 years to come out with a plan and he thinks that tossing out some glossy brochure with a bunch of pictures of himself 2-weeks before the election is acceptable. Under this administration, my taxes went up, my healthcare costs have gone up, my utility/gas/grocery expenses went up dramatically, the value of my home has decreased by 60%, and my savings was all but wiped out thanks to paycuts I had to take because I’m not an auto union worker.

  10. Amy Weintraub  ::  2:39 am on October 25th, 2012:

    Michael, I don’t know how you can trust a man or his administration when they stared right at a camera and lied to the American people and the world about the incident in Benghazi. They knew that consulate was under attack, they didn’t lift a finger to try to help our people there, and those poor men died waiting for anyone to respond to their pleas for help. As if that were not bad enough, they came up with a ridiculous story to try and cover up their incompetence. Those examples of the President’s conviction makes my stomach turn.

  11. Vivian Darkbloom  ::  5:10 am on October 25th, 2012:

    Amy,

    I’m sympathetic with your predicament. I agree—the President has had four years to come up with a tax plan and to actually try to get Congress to at least vote on it. Howard has linked to another TPC website that supposedly refers to Obama’s “transparent plan” that “he believes” will contribute towards reducing the deficit. Well, here’s what I see on that page Howard refers to:

    –The American Recovery and Reinvestment Act of 2009 (ARRA)
    –2010 Compromise Tax Agreement
    –The American Jobs Act of 2011

    I’ve often wondered what Obama’s “tax plan” is, and if this is it, I’m very puzzled. The ARRA is history and as far as tax plans are concerned there was not much in it. It did, however, increase the debt by nearly a trillion. The 2010 Compromise Tax Agreement was surely not “Obama’s plan” and that’s history, too. That leaves the American Jobs Act. The American Jobs Act, introduced by Senator Reid as S 1549, on September 13, 2011 introduces a number of new spending measures and targeted tax cuts that are ostensibly meant to spur economic growth. That bill also includes proposed “offsets” designed to offset those tax cuts and spending increases. Notably, these offsets are designed only to offset the spending part of that bill—*not a penny goes to deficit reduction*. The bill has gone absolutely nowhere in the Democratic controlled Senate. If this “plan” were serious, Obama and Reid would have insisted that it get out of committee and onto the Senate floor for a real vote.

    As to those “offsets” in the American Jobs Act, the bill limits deductions and exclusions for high-income taxpayers, but restricts this to a lesser extent than proposed by Romney. The bill also treats “carried interest” as ordinary income, and depreciate corporate jets over a 7-year period (eliminating a tax preference Obama has extended several times). But, the real revenue raiser is this:

    “Amend(s) the Budget Control Act of 2011 to: (1) increase the deficit reduction target of the Joint Select Committee on Deficit Reduction from $1.5 trillion to $1.95 trillion, and (2) provide that the revenue enhancement provisions of this Act will not take effect if a Committee bill achieving greater than $1.65 trillion in deficit reduction is enacted by January 15, 2012.”

    In other words, that “transparent plan” as Gleckman calls it punts the real work to the Super Committee to figure out a way to pay for Obama’s spending. Another Senate bill with the same name was submitted shortly thereafter proposing to raise taxes on the “rich”, but that, too, never got past the stage of being read.

    Gleckman could as well have mentioned the PPA (“ObamaCare”) that raised additional Medicare and income taxes on high earners; however, again, not a penny of those tax increases went to deficit reduction. We now know that bill will substantially increase the deficit and the debt.

    Well, now, and then there’s that 2013 budget document which presumably spells out Obama’s “plan” for the future. If that were a serious plan, that budget (and the earlier ones) would have been backed by the party he controls and at least passed by the Senate. Instead, that budget plan was defeated 414-0 in the House and 99-0 in the Senate. And, that “plan” includes letting the Bush/Obama tax cuts expire on the “rich”, raising the dividend tax to ordinary rates and raising the CG tax on the “rich” to 20 percent, plus a few other non-significant changes that are designed not to reduce the deficit, but as political rallying points. The revenue raised by that “plan” does not even begin to pay for the increased spending he committed us to under his watch, much less “reduce the deficit” and/or the debt.

    Amazingly, Gleckman then goes on to write: “Obama believes that tax increases on high-income households are a key piece of deficit reduction. Romney would not use even a penny of new revenues to help shrink the deficit.” Apparently, Howard is inclined to believe Obama, despite ample evidence over the past four years that that will never happen.

    Amy, perhaps you will know read my comment a bit more facetiously, as it was intended. That budget document is history and if that recently released document is his new “plan”, it’s a joke and an insult to any intelligent American voter.

  12. Jack B  ::  6:57 am on October 25th, 2012:

    There you go again Vivian, always clouding the issue with facts.

  13. The Ten Biggest Differences between the Romney and Obama Tax … « Double Taxes  ::  5:55 pm on October 25th, 2012:

    […] post: The Ten Biggest Differences between the Romney and Obama Tax … Comments […]

  14. Know Your President(ial Candidate)’s Tax Policy  ::  2:31 am on November 14th, 2012:

    […] Read here for more, also here.  Key differences between the candidates’ tax proposals are here. […]

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