Good work there, Mitt and Rick

As explained by Floyd Norris in today's New York Times, while Rick Santorum's tax proposals would slash federal revenues by 40 percent, he would manage to raise taxes on single mothers. Gee, I wonder why that happened.

There's also news today concerning Romney's latest tax plan. The Tax Policy Center has released a new estimate, based on the available public info plus discussions with his advisors. The TPC doesn't credit Romney with any of the base-broadening that he has promised via the repeal of tax preferences, since the campaign is apparently unwilling to provide any details.

Absent any such base-broadening, the Tax Policy Center finds that, "on a static basis, the Romney plan would lower federal tax liability by about $900 billion in calendar year 2015 compared with current law, roughly a 24 percent cut in total projected revenue." The static revenue loss is still $480 billion even if the baseline is current policy, which includes assumed indefinite extension of the expiring Bush tax cuts.

Well, at least Romney is being true to his old Bain Capital ways, in the sense that he is proposing to have the U.S. take on a whole lot of extra debt.

Also noteworthy are the Romney plan's distributional effects. The following is a list of the average tax cut and the percent change in after-tax income that the Tax Policy Center ascribes to the Romney plan for 2015, compared to the current law baseline:

Lowest Quintile: $256 average tax cut, 0.7% increase in after-tax income
Second Quintile: $1,016 average tax cut, 3.2% increase in after-tax income
Middle Quintile: $2,130 average tax cut, 4.4% increase in after-tax income
Fourth Quintile: $4,994 average tax cut, 6.5% increase in after-tax income
Top Quintile: $27,508 average tax cut, 12.6% increase in after-tax income

Top 1 Percent: $237,983 average tax cut, 18.5% increase in after-tax income
Top 0.1 Percent: $1,148,834 average tax cut, 21.7% increase in after-tax income

This ignores the incidence of accompanying spending-side changes, which it appears would be sharply tilted towards curtailment at the bottom of the income distribution. In addition, as a static estimate, it ignores behavioral responses to enacting what I would call just temporarily lower rates (since comparably large spending cuts are most unlikely to materialize, even if he does manage to squeeze the poor a bit). Romney's advisors would want to take credit for a positive economic growth response. But there is no reason to expect this when the rate cuts transparently cannot be more than temporary, given that they would greatly worsen the U.S. budget picture and make the threat of default both more likely and more imminent.