Supply-Side Economics Lesson For Mitt Romney

The Wall Street Journal published my letter below today, along with three others, that responded to their recent lead editorial entitled Romney's Tax Deduction Cap.

 

My letter focused on the principles of supply-side economics that are not followed by Mitt's so-called economic growth plan or the many TV hosts like Larry Kudlow & Sean Hannity who shamelessly endorse Mitt & his policies no matter what they are.  I am sure Larry knows better re the economics.

 

The other three published letters focused on the AMT & why there will not be deficit reduction with Mitt's economic plan, Mitt's plan doing nothing to simplify the tax code, & the negative impact on taxpayers that will result over time by having any tax deduction cap be based on a fixed amount as Mitt has presented rather than as a percentage of income.

 

Dear Editor,

 

Gov. Romney's plan to reduce rates across the board by 20% and eliminate deductions mostly for high-income people will result in an equal or most likely higher effective tax rate on the highest income earners than at present, resulting in no real incentive for growth.

The Romney campaign is hamstrung by its contradictory three-legged-stool position that makes up its own class warfare struggle: "I will not reduce the share of taxes paid by high-income earners," "I won't put in place a tax cut that adds to the deficit" and "I will lower taxes on middle-income families."

The missing point from supply-side economic principles in the Romney plan is that the reduction of the size of government and its claims on earned income is what fuels economic growth when coupled with lower marginal tax rates for the highest income earners and sound-money policies. There is no economic growth if Gov. Romney cuts the top marginal income-tax rate and the deductions for high-income earners leaving the effective tax rate the same or higher for these people who are the job creators.