Mitt Romney’s tax plan can work – eventually raising the nation’s gross domestic product by as much as 3 percent – Princeton University economist Harvey Rosen tells Newsmax TV.
“It is mathematically possible for the Romney tax proposal to accomplish its goals – keep the whole system revenue-neutral, reduce rates but keep the share of taxes paid by the upper-income people about the same by scaling back or eliminating the tax preferences they currently enjoy,” Rosen tells Newsmax in an exclusive interview.
Watch the exclusive interview here.
Rosen, a professor of economics and business policy, recently wrote a paper on the Republican presidential candidate’s tax plan entitled, “Growth Distribution and Tax Reform: Thoughts on the Romney Proposal.”
“There’s going to be lots of tax preferences that are going to be scaled back or reduced,” Rosen said. “Various loopholes. And the reason that’s key is because even though high-income people are going to get a break from the lower rate, a lot of that money is going to be clawed back by broadening the tax base.
“So it is possible to lower rates, broaden the base, keep revenues the same – and make sure that the tax burden on middle-income folks does not go up.”
Rosen said assertions by President Barack Obama’s campaign that the Romney plan would work by “either blowing a hole in the deficit or raising taxes on middle-class families" is misguided.
“That’s just false. It’s possible to keep total revenues the same even for people in the upper income brackets who are facing a lower tax burden,” he said. “And the way you do it is by cutting back or eliminating various tax preferences that they have.
“That’s a fallacy in the Obama campaign’s reasoning. They just seem to have forgotten about this critical part of the Romney plan which is scaling back or eliminating a bunch of tax preferences.”
And all those preferences should be up for grabs, he said. “The mortgage-interest deduction, might make sense to scale that back some. The deduction for state and local taxes, I could imagine scaling that back some.”
Rosen said the Romney plan should eventually increase GDP by 3 percent. “In my view, say, after five or 10 years, we could expect GDP to be about 3 percent higher than it would have been otherwise.”
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