Romney’s Jobs Plan Relies on His Tax Proposal
Joel Prakken, chairman of the firm Macroeconomic Advisers, says it would be very difficult for Romney’s plan to work without ending some very popular deductions — “mortgage interest, health care benefits and the like.”
“And so, there’s some concern out there about whether it actually will be possible to engineer this kind of tax reform with such sharp cuts in marginal rates,” Prakken says.
Romney has recently suggested he might just cap taxpayers’ deductions to $17,000. But some analysts say it’s doubtful that would fully pay for the cost of Romney’s tax cut, either.
Prakken says the elimination of deductions and loopholes could lead to faster job creation in the long run, but in the short term it could eliminate jobs in industries like housing that are already struggling.
“Until we see precisely how the lower rates are going to be paid for, in terms of broadening the tax base, it’s very difficult, it’s just impossible, in fact, to make an unqualified statement about just how much growth we’re going to get from this kind of tax initiative,” Prakken says.
As for the 12 million new jobs Romney says his policies will produce in four years, Prakken says it’s not a very high bar.
“In our long-term forecast, in which we assume the continuation of current policies and an economy that’s recovering toward full employment anyway, we were able to create roughly 12 million new jobs without recourse to these policies,” Prakken adds.