The rapid-fire succession of GOP debates has continued, with four more occurring in just the last couple weeks. Here we deconstruct the most ludicrous or notable quotes from each candidate:

Former House Speaker Newt Gingrich: …when I was speaker, we had four consecutive balanced budgets...

It was exciting to see Ron Paul finally call Gingrich out during the latest debate for repeatedly claiming that he balanced the federal budget four years in a row. Citizens for Tax Justice’s Bob McIntyre thoroughly debunked this claim over 9 months ago when Gingrich first starting making it, yet until now none of the GOP candidates have called him out for it.

Former Governor Mitt Romney: I'm proud of the fact that I pay a lot of taxes.

Romney does not pay “a lot of taxes.” He paid an effective tax rate of less than 14% on his $22 million in 2010, which is actually a lower rate than many individuals making just $60,000 pay.

Former House Speaker Newt Gingrich: I'm prepared to describe my 15 percent flat tax as the Mitt Romney flat tax. I'd like to bring everybody else down to Mitt's rate, not try to bring him up to some other rate.

Gingrich’s $18 trillion tax plan would not bring everyone down to the rate that Romney pays because it would actually further reduce Romney’s tax rate to almost zero. Even Romney seemed to think that reducing his tax rate to zero would be going too far and went out of his way during a recent Republican debate to point this out to Gingrich.

Former Senator Rick Santorum: I talk about five areas where I allow deductions… one of them would be, be able to deduct losses from the sale of your home. Right now, you can't do that. You have to pay gains, depending on the amount, but you can't deduct the losses.

Ever trying to play the role of a blue collar populist, Santorum highlighted his idea to allow taxpayers to deduct losses from the sale of their home. He left out the fact that current law already allows an individual to exclude up to $250,000 of capital gains from the sale of a home. How could it be fair to exclude the gains but deduct the losses? He also ignores the fact that homeowners are already subsidized to the tune of $75 billion through the home mortgage interest deduction. A much more effective approach to helping struggling homeowners (and renters for that matter) would be for state lawmakers to enact strong property tax circuit breakers, which are better targeted to low-income households.

Representative Ron Paul: I would like to see income tax reduced to near zero as possible.

Although he has not laid out a specific long term tax plan, Paul has frequently called for the complete repeal of the 16th amendment (which allows the creation of the income tax) and might seek to replace it with a national sales or flat tax. He does not typically mention that such a plan would be extremely regressive no matter how you structure it.

Citizens for Tax Justice director Bob McIntyre wrote in the American Prospect this week, “With the two leading Republican presidential contenders arguing over whether super-wealthy investors should pay 15 percent or zero percent in federal taxes, it would seem that President Barack Obama has a potent campaign issue against either of them… Sadly, Obama hasn’t yet proposed to let all of the Bush tax cuts for the rich expire.”  

                                                                   Read the article.

After Mitt Romney conceded that CTJ’s estimate of his effective tax rate of 14 percent was correct, Newt Gingrich said that he believed everyone should pay a similar effective tax rate and that this was an argument for his proposed optional 15 percent “flat tax.” Gingrich fails to mention that his plan would actually lower Romney’s effective tax rate almost to zero percent.

CTJ epxlained to TIME that the optional “flat tax” in Gingrich’s plan actually has two tax rates — 15 percent for the income that most of us earn, and zero percent for the investment income that Romney lives on.

TIME also reported on CTJ’s findings that Romney would save $3.4 million a year under his own plan, but would save $6.4 million under Gingrich’s plan.

The Washington Posts's Greg Sargent cites figures from CTJ and concludes

If Romney, whose wealth is estimated at as much as $250 million, is elected president and gets his way on tax policy, he would pay barely more than half as much in taxes than he would if Obama is reelected and gets his way — and the Bush tax cuts on the wealthy expire and an additional Medicare tax as part of the Affordable Care Act kicks in.

Read the article.

Three months ago, CTJ's Bob McIntyre told TIME that GOP candidate Mitt Romney likely has an effective federal tax rate of around 14 percent because of the tax break for investment income that Romney enjoys. Today, the candidate said, “What’s the effective rate I've been paying? It's probably closer to the 15 percent rate than anything.”

Romney went on to say, “Because my last 10 years, I've ... my income comes overwhelmingly from investments made in the past, rather than ordinary income or rather than earned annual.”

In other words, a wealthy person like Romney can receive most of his income in the form of capital gains and stock dividends, which are subject to a top rate of just 15 percent under the personal income tax and not subject to payroll taxes.

A CTJ report from last year explains that about one third of people with income in excess of $10 million annually get the majority of their income from investments and, because of these tax preferences, pay a lower effective tax rate than many middle-income taxpayers, who typically get their income from work. Romney is a member of this lucky group of wealthy individuals.

Ending the tax preference for capital gains and stock dividends is therefore the primary way to implement President Obama’s Buffett Rule, the principle that tax reform should reduce or eliminate those situations in which millionaires pay lower effective tax rates than middle-income people.

In Romney’s case, there is actually a very specific loophole that probably allows his income to be taxed as capital gains (taxed at the 15 percent rate) even when it is actually compensation for work. We call this the Romney Loophole, which allows wealthy fund managers to treat their “carried interest” (profits that they receive as compensation for their work) as capital gains and thus subject to the low 15 percent tax rate.

President Obama’s budget plans all contain a proposal to close the Romney Loophole, which would at least end the very worst abuse of the tax preference for capital gains and stock dividends. But to truly implement the Buffett Rule, the tax preference for investment income must be eliminated entirely.

With the Republican primaries now in full swing, the GOP candidates’ rhetoric on taxes has become even more disconnected from reality.

Santorum is No Blue-Collar Populist

Former Senator Rick Santorum used his new spotlight during last Saturday’s ABC-Yahoo GOP presidential candidate debate to highlight his plan to cut the corporate tax rate in half and eliminate the tax entirely for domestic manufacturing. Santorum explained the need for cutting the 35 percent tax rate by arguing that our corporate tax rate is the “highest in the world.”

While we have the second highest statutory corporate tax rate on-paper, the excess of tax breaks and loopholes in our corporate tax code make it so the effective corporate tax rate (the amount actually paid) is close to half of that. In fact, the US actually has the second lowest level of corporate taxes, as a share of its overall economy, of any developed country in the world.

Although Santorum promotes the populist aspects of his tax plan, the truth is that the majority of his proposed tax cuts would go to the richest five percent of Americans. A new analysis by Citizens for Tax Justice shows that his tax plan would provide an average tax cut of $217,500 to the richest 1 percent, which is over 100 times the size of the average tax cut the middle fifth of Americans would receive.

Gingrich on a Tax By Any Other Name

Former House Speaker Newt Gingrich usually offers nothing but hot air when it comes to taxes, but this week the Gingrich campaign brought up an interesting point in a new campaign ad attacking Romney for raising user fees in Massachusetts. The ad uses Romney’s support of user fees to question his anti-tax credentials because it says that user fees are essentially a “tax by another name.”

Of course, Gingrich’s ultimate conclusion is mistaken in that he assumes Romney should not have raised user fees or taxes but should simply have left public services unfunded.

But Gingrich’s criticism nonetheless acknowledges the trend among even the most infamous anti-tax governors to substantially increase user fees to avoid officially raising taxes. In fact, since 1979 virtually every state in the nation has begun to rely more heavily on user fees to raise revenue.

Huntsman’s Tax Loophole Consolidation Plan

Rhetorically, former Governor Huntsman hit it out of the park during the NBC-Facebook GOP presidential candidate debate last Sunday by declaring that we need to “say so long to corporate welfare and subsidies” and that our tax code is “chuck full of loop holes and deductions” which weigh it down to the tune of $1.1 trillion.

Unfortunately however, his tax plan, like the other GOP candidates’ tax plans, includes a “territorial” system that would exempt the offshore profits of U.S. corporations from U.S. taxes. This is essentially a way to expand and consolidate the existing loopholes that encourage U.S. companies to shift their investments offshore.

Similarly, Huntsman’s proposed changes to the personal income tax would actually add huge loopholes for the rich by exempting taxes on capital gains and stock dividends. In addition, while his plan would end a substantial amount of wasteful tax subsidies, it would also eliminate invaluable tax credits like the earned income tax credit.

In other words, Huntsman’s plan is more of a tax loophole consolidation plan for the rich and powerful, rather than a tax reform for everyone.

A new CTJ report shows how taxpayers in each state would be affected by the tax plans proposed by the Republican presidential candidates. The report finds that the cost of the tax plans would range from $6.6 trillion to $18 trillion over a decade. The share of tax cuts going to the richest one percent of Americans under these plans would range from over a third to almost half. The average tax cuts received by the richest one percent would be up to 270 times as large as the average tax cut received by middle-income Americans.

Read the report.

As the presidential campaigns rev up, taxes are emerging as the defining issue of the election. Unfortunately, a lot of misinformation and myths about taxes are spreading as candidates and commentators look to push their different economic agendas.

To start the election season off, here is a breakdown of the five biggest tax whoppers being told by the candidates and commentators alike.

1) Myth: 47 Percent of Americans Do Not Pay Taxes

Fact: All Americans Pay Taxes

Pundits and politicians will continue to rile up audiences this election season by claiming that half of Americans in the U.S. do not pay any taxes. This talking point is used to deflect questions about why the rich should pay their fair share.

The basis of this claim is data showing that 47 percent of Americans did not owe federal income taxes in 2009, which the recession was at it's peak. The claim ignores the much more regressive federal payroll taxes or state and local sales, income, and property taxes that all Americans pay. The reality is that three-quarters of American households actually pay more in payroll taxes than federal income taxes.

Adding to this, the very reason many low income Americans do not pay federal income taxes is because they benefit from highly effective tax credits like the earned income tax credit (EITC), which incentivize work while providing much needed support to working low and middle class family budgets.

2) Myth: The American People and Corporations Pay High Taxes

Fact: The US Has the Third Lowest Taxes of Any Developed Country in the World

Total US taxes are actually at the lowest level they’ve been since 1958. The US has the third lowest level of total taxes of the Organisation for Economic Co-operation and Development (OECD) countries, with the exception of only Chile and Mexico. President Obama, who is often falsely accused of raising taxes, actually cut taxes for 98 percent of the country on top of temporarily extending the entirety of the Bush tax cuts.

A related claim is that the US has the second highest corporate tax rate in the world. This is misleading because it’s based on the on-paper (statutory) corporate rate rather than the actual (effective) rate that corporations pay. Because of the plethora of corporate tax breaks and loopholes, the US actually has the second lowest coporate taxes as a share of GDP in the OECD. In fact, 30 major corporations, including Verizon, Boeing and General Electric, paid nothing in corporate taxes over the last 3 years.  Rather than cutting corporate taxes, the sensible solution is to pass revenue-positive corporate tax reform.

3) Myth: Cutting Taxes Creates Jobs and Raises Revenue

Fact: Tax Cuts Reduce Revenue And Are Not Associated with Economic Growth

Since the rise of supply-side economics, tax cuts for the rich have been regarded as a magic elixir that could unleash economic growth, while simultaneously increasing government revenue.

The reality is that the tax cuts that have been tried for over 30 years have proven to be a stunning failure in all regards. In fact, history has shown that the tax rate on the wealthy simply has nothing to do with economic growth. Just consider the strong growth that occurred after President Clinton increased taxes versus the dismal growth following the Bush tax cuts.

Not surprisingly, tax cuts have been definitely proven to reduce revenue. Even President Bush's own Treasury Department concluded that tax cuts do not create enough economic growth to to come close to offsetting their costs or raising revenue. The Bush tax cuts cost $2.5 trillion in their first decade and the Reagan tax cuts cost $582 billion.

4) Myth: The US tax system is very progressive because wealthy individuals already pay a disproportionate amount of taxes.

Fact: At a Time of Growing Income Inequality, the US Tax System is Basically Flat.

Conservative commentators and politicians claim that it would be unfair to raise taxes on wealthy individuals because they already pay a disproportionate amount of taxes, usually citing the fact that the top one percent of income earners pay 38 percent of federal income taxes. Once again, such claims ignore the fact that the federal income tax is just one of many taxes that individuals pay.

When you take into account all of the taxes that individuals pay, the truth is that our tax system is relatively flat. The top one percent of income earners receives 20.3 percent of total income while paying 21.5 percent of total taxes and the lowest 20 percent of income earners receive 3.5 percent of total income while still paying out two percent of total taxes.

In other words, wealthy individuals pay a high percentage of taxes because they earn a highly disproportionate amount of income. This is, of course, a consequence of growing income inequality in the United States, which is at a level not seen since before the Great Depression. 

5) Myth : The “Fair Tax” or a flat tax would be more “fair”

Fact: The “Fair Tax” or a Flat Tax Would Make Our Tax System Even More Regressive

Whether it’s Steve Forbes promoting his flat tax proposal in 1996 and 2000 or Rick Perry and Newt Gingrich in the 2012 presidential race today, the idea to sweep away our current tax system and replace it with a single rate, flat income or national sales tax (called the “Fair Tax”) has become a perennial campaign issue for Republican presidential candidates.

The simplicity of these proposals has much appeal for many Americans, who believe they would make filing taxes less complex and, at the same time, stop wealthy individuals from being able to game the tax system.

A deeper look, however, reveals that both the “fair” and flat tax are very regressive compared to our current system. One recent analysis of a typical flat tax proposal from last year shows that it would result in an average tax increase of $2,887 for the bottom 95 percent of Americans, while those in the top one percent would receive an average tax cut of over $209,562. Furthermore, the Institute on Taxation and Economic Policy’s analysis of the Fair Tax points out the under this system, the sales tax rate would have to be set at a politically and administratively unfeasible rate of at least 45 percent, and, the result would be the bottom 80 percent of American’s paying an average of 51 percent more in taxes compared to our current system.

It’s also important to note that “complexity in the tax code,” which a flat tax system purports to fix, is not caused by our progressive rate structure; rather, it’s the multitude of loopholes and tax breaks, all of which could easily be eliminated while keeping a progressive tax rate structure in place. 

UPDATE: Candidate Mitt Romney told MSNBC on December 22 that he does not intend to release his tax returns, even if he becomes his party's nominee. Watch CTJ's Rebecca Wilkins explain to ABC News Brian Ross what Romney's tax returns would show about his offshore investments and "carried interest" income. ABC video at this link.

End the Loophole Allowing Romney and other Fund Managers to have "Carried Interest" Taxed as "Capital Gains"

GOP presidential hopeful Mitt Romney's personal wealth, estimated at $190 to $250 million, has been in the news a lot lately, including the sweet retirement deal he negotiated with Bain Capital, the private equity firm he used to head. The stories confirm CTJ director Bob McIntyre's comments to Time Magazine that Romney's multi-million dollar income is likely taxed at the special low 15 percent rate imposed on dividends and long-term capital gains.

This makes Romney a good poster child for the "Buffett Rule," the principle that millionaires should not pay lower effective tax rates than middle-income people. One step towards implementing the Buffet Rule is to close the loophole that allows "carried interest" (the fund managers' share of the deal they get as compensation) to be taxed at the 15 percent rate even though it is not truly capital gain.

Much of Romney's income that is taxed at that super-low rate is actually compensation in the form of a "carried interest" in the private equity deals of Bain Capital. While CEO's, actors, and athletes with multi-million dollar salaries, bonuses, or stock options pay income tax rates of 35 percent (and payroll taxes) on their compensation, managers of private equity firms, hedge funds, and other investment funds pay only 15 percent income tax (and no payroll tax) on their share of the funds' profits that they get in exchange for their management services. Even some managers who benefit from the low rate admit it's not justified.

Since this loophole benefits those who make millions, hundreds of millions and sometimes over a billion dollars in a single year, it is truly a case of the richest one percent being subsidized by the other 99 percent who pay higher taxes or get less in services to pay for this tax break.

Various proposals have been offered to close this loophole and, in the last Congress, one of those measures passed the House (three times!) but didn't make it through the Senate. Republicans and many Democrats in the Senate claimed that the loophole somehow helps encourage investment in poor neighborhoods, helps minorities, small businesses and even cancer patients.

The truth is that it does not encourage any type of investment in any part of the country because it does not benefit the people putting up money for investment. It merely allows those who manage this money to pretend that they have invested their own cash and thus receive the capital gains tax break that is ostensibly in place to encourage investment.

Now that this loophole has the face of a very wealthy presidential candidate on it, perhaps the American public will start to notice and demand that it be eliminated. If you believe the tax code shouldn't favor the richest 1 percent over the 99 percent, here's a place to start: Close the Romney Loophole.

Photo of Mitt Romney via Gage Skidmore Creative Commons Attribution License 2.0

Despite receiving increased attention after becoming the new GOP presidential frontrunner, former House Speaker Newt Gingrich continued his blunder-filled forays into tax policy at the ABC News Iowa Republican primary debate last Saturday.

The most outstanding of the Gingrich tax policy foibles in the debate was a flat-out lie about his past support of a cap-and-trade system to deal with climate change.

Responding to Minnesota Rep. Michele Bachmann’s charge that he supported cap-and-trade, Gingrich replied “I oppose cap-and-trade” and went on to say that he helped “defeat it in the Senate.” In reality however, Gingrich has said in the past that he would “strongly support” cap-and-trade and has repeatedly backed similar efforts to reduce carbon emissions.

Gingrich’s attempt to hide his past position on this issue highlights how anti-tax absolutists have pushed the entire Republican presidential field away from any policy that could increase revenue, even if it would help prevent a climate crisis. Economists agree that a cap and trade system, which would raise revenue, has the same effect as a direct tax on carbon-producing activities. Of course, Gingrich has tried to rewrite history before, and has been called out by CTJ’s director Bob McIntyre.

Gingrich also went on the offensive against former Massachusetts Governor Mitt Romney, criticizing Romney’s proposal to make capital gains tax-free only for taxpayers with income under $200,000 whereas Gingrich would make them tax-free for all taxpayers.  

What Gingrich failed to mention is how he would offset the $1.3 trillion revenue loss that would result or that the wealthiest 1 percent of taxpayers alone would receive three-quarters of the benefits. A fairer and more sustainable tax policy would actually be to end the special low income tax rate for capital gains so that they are treated like any other form of income.

As the new GOP frontrunner, Gingrich will quickly learn that people are paying close attention to his tax policy pronouncements, and CTJ will provide the missing facts whenever needed.

While all of the 2012 GOP presidential candidates have had their fair share of tax policy blunders, Minnesota Republican Representative Michele Bachmann has stood out among the field for her outrageous and often factually incorrect statements about our tax system.

During the recent CNBC GOP Debate, Bachmann mentioned “47 percent of Americans who pay no federal income tax” and then took this point a step further saying that “even if it means paying the price of two Happy Meals a year, like $10, everyone can afford at least that.”

Bachmann’s statement is intentionally misleading. While many Americans do not pay federal income taxes, all Americans pay other taxes such as payroll, property, sales taxes (often on the Happy Meals they buy), and other largely regressive taxes.

Some taxpayers don’t pay federal income taxes because they are working poor families who receive the refundable parts of the Earned Income Tax Credit and the Child Tax Credit (which are available only if an adult in the family is working). Other taxpayers don’t pay federal income taxes because they are recipients of Social Security benefits, most of which are not taxed.

One recent report from CTJ found that if we set aside Social Security recipients and combine just two taxes, federal income taxes and payroll taxes, the number of Americans “not paying” drops to 15 percent, and these are concentrated among the poor.

Michelle Bachmann said other wildly inaccurate things about taxes during the same debate. For example, she claimed that the United States has an “effective” corporate tax rate of about 40 percent. She apparently was referring to the federal statutory corporate tax rate of 35 percent, which, combined with the average state statutory corporate tax rate would be around 40 percent. Of course, this is entirely different from the effective corporate tax rate, which is the percentage of profits that corporations actually pay in taxes after accounting for the wide range of tax breaks and loopholes.

The recent CTJ-ITEP report “Corporate Taxpayers & Tax Dodgers,” examines most of the Fortune 500 companies that were profitable over the last three years and finds that their effective corporate income tax rate was just 18.5 percent on average. Many major corporations like General Electric or Verizon paid nothing at all.

These corporate tax breaks and loopholes have spun so out of control in the US that despite having the second highest statutory corporate tax rate in the developed world, the US actually has the second lowest rate of corporate tax collected as a percentage of GDP.

Although Bachmann was especially brazen in the most recent debate, she has a history of outrageous tax policy statements. For example, she has advocated for the elimination of all taxes, rewritten fiscal history by claiming that the Bush tax cuts aren’t the main driver of the deficit, and promoted a job killing corporate tax amnesty program.


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Like many other presidential candidates, Texas Governor Rick Perry proposes massive tax cuts for the richest Americans, but he proposes to do so in the most complicated way possible. His plan would have taxpayers calculate their taxes twice — once under the existing rules, and again under an optional 20 percent “flat tax,” to see which would be a better deal.

This would not make anyone’s life easier on tax day — except the wealthy Americans whose investment income would be exempt from taxes under Perry’s optional flat tax. These lucky taxpayers would quickly find that the optional “flat tax” actually has two tax rates: zero percent for the investment income that mostly goes to the rich and 20 percent for the types of income that most of us depend on.

It’s also clear that the individual tax under Perry’s plan would lose a huge amount of revenue compared to the existing personal income tax. How could it not? If taxpayers are offered an alternative way to file, we assume they will choose this alternative only if it lowers their tax bills. The result will be, inevitably, a loss of revenue. If taxpayers truly preferred a simple tax over a lower tax, they could choose simplification right now by giving up the various adjustments, deductions and credits that lower their tax bills but make filing more complicated. We doubt many choose this.

Most plans to exempt investment income from taxes and shift towards a consumption tax result in tax increases for the poor. (This would be the result of the “flat tax” proposed by Senator Arlen Specter for several years and the “9-9-9” plan proposed by Herman Cain.) However, in recent years, Presidential candidate John McCain, House Budget Chairman Paul Ryan and other GOP leaders have tried to limit the terrible optics involved in raising taxes on the poor by making their regressive tax plans “optional.” This means that wealthy taxpayers with investment income would usually choose the alternative tax that exempts this income, while most ordinary people earning wages would end up sticking with the current rules.

What would stop taxpayers from simply switching back and forth each year, depending on which set of rules results in lower taxes? It’s unclear how Perry’s plan would address this, but some previous versions of this proposal claimed to address this by forcing taxpayers to choose which system to file under and then locking them into that choice for years to come. They would be allowed to change their minds one time during their lives and could also change whenever their filing status changes because they become married or divorced. For this reason, we have long thought of these proposals as a Divorce Lawyers Jobs Creation Act.

As more details of the plan become available, Citizens for Tax Justice will estimate its impacts on taxpayers at different income levels and its impact on revenue. But even the limited details available now make clear that this plan is not designed to help the working class.

Photos via Gage Skidmore Creative Commons Attribution License 2.0

With his recent dramatic rise to second place in the polls, Former CEO of Godfather’s Pizza Herman Cain and his infamous 9-9-9 plan were the belles of the ball at the last two Republican debates.

According to a full analysis by Citizens for Tax Justice, if Cain’s 9-9-9 plan was in effect in 2011 the poorest 60 percent of taxpayers would pay an average of $2,000 more in taxes, while the richest 1 percent of taxpayers would each pay an average of $210,000 less in annual taxes. Making matters worse, the plan would have actually raised $340 billion less in revenue in 2011, meaning that it would make our deficit much worse rather than better.

Since the CTJ analysis was released, the Cain campaign has been dribbling out additional details that change the plan in an ad-hoc fashion as he struggles to defend his tax proposals.

The Washington Post and Bloomberg economic debate on October 11 broke the record for most colorful tax policy jabs, as Former Utah Governor Jon Huntsman said he confused the 9-9-9 plan with “the price of a pizza”, while Minnesota Representative Michele Bachmann observed that “when you take the 999 plan and you turn it upside down, I think the devil is in the details.”

During the CNN Western debate on October 18, the candidates piled on the 9-9-9 plan, arguing that the imposition of a 9 percent new sales tax would ultimately lead to higher taxes because it would give the federal government another revenue stream and could be raised in the future. Interestingly, this particular charge is not borne out by the evidence from a plethora of countries that have imposed consumption taxes, including in Canada where total revenue collected actually went down after the imposition of its value-added tax.

As we have noted a few times, however, the regressiveness of the 9-9-9 plan is no joke. The plan would replace the entire federal tax code with a nine percent national sales tax, nine percent flat income tax, and a nine percent business flat tax. It’s important to note that although the last component is called a ‘business flat tax’, it’s essentially a payroll tax rather than a flat corporate income tax as the name would imply.

For his part, Cain defended the plan saying that reading his campaign’s full analysis of the 9-9-9 plan (which was only made available publically halfway through the CNN debate) would address the “knee-jerk” reactions to his plan.

His team’s own analysis directly contradicted Cain’s point during the debate that his plan does not contain a “value-added tax.” In reality, the report refers to the business flat tax as a “subtraction method value-added tax.”

Another problem for Cain is that his campaign’s own analysis provides no evidence that the 9-9-9 plan would not be extremely regressive, though it does include a previously unmentioned “poverty grant.”

Apparently, Cain himself knows that this “poverty grant” does not allay the concerns about the plan’s regressive impact, because Cain said the next day that he’s “not going to throw the people at the poverty level under the bus” and that he has “already made provisions for that,” but hasn’t “told the public and my opponents” about what those provisions are yet.

And just today Cain announced even more significant changes to his plan. His tax plan has always included “empowerment zones” that were not defined. The Cain campaign now calls these “opportunity zones” because the word “empowerment” sounded too liberal. It’s still unclear how living in or working in an “opportunity zone” would change one’s tax bill under Cain’s plan, but he announced today that these designated areas could be free of building codes and minimum wage laws.

The Washington Post reports that he will also change his individual tax from a single-rate tax to one with several brackets. If true, this means that Cain’s plan no longer consists of three flat 9 percent taxes… which means he has given up the “9-9-9” plan.

The question from a Tea Party voter was this: “Out of every dollar I earn, how much do you think that I deserve to keep?”

It came during the Fox News and Google Republican presidential candidates debate last Thursday, and was directed at Minnesota Rep. Michele Bachmann.  It was her second crack at the question, so she’d had plenty of time to think it through. And her reply was this: “I think you earned every dollar. You should get to keep every dollar you earn.”

A few sentences later, however, the Congresswoman added, “Obviously, we have to give money back to the government so that we can run the government….”

The anti-tax orthodoxy has become so rigid that candidates like Bachmann, who also chairs the House Tea Party Caucus, must try to reconcile the position that no American should have to pay taxes even when they work for the government who collects those taxes and know perfectly that taxes are required to “run the government.”

Bachmann may have had the most telling (and head-exploding) tax policy moment during the last weekend’s three day series of major Republican presidential candidate events, but she was not alone among the candidates in stumbling over tax issues.

Former Utah Governor Jon Huntsman faced a tough question from the debate moderator Megyn Kelly who asked, “Is there any scenario under which you could side with the 66 percent of people who believe that it is a good idea to raise taxes on millionaires?” Despite his status as most moderate Republican candidate this season, Huntsman delivered the prefabricated anti-tax response: “This is the worst time to be raising taxes, and everybody knows that.”

Clearly, not “everybody” knows that. As Kelly’s question suggested, 66% of American’s support increasing taxes on the wealthy. Hewing to their anti-tax orthodoxy, Huntsman and the rest of the GOP field find themselves at odds with two thirds of the American public.

Former New Mexico Gov. Gary Johnson made his first major GOP debate appearance memorable by using his limited speaking time to call twice for replacing our current income tax system with the, so-called, Fair Tax, which is essentially a 30% national sales tax. As the Institute on Taxation and Economic Policy showed in its report on the Fair Tax, the plan is both unworkable and extremely regressive.

Although Gary Johnson is probably the most forthright in his support of the Fair Tax, at least half of the Republican field (and most notably current front-runner Texas Governor Rick Perry) have come out in favor of it. The one exception is former Massachusetts Governor Mitt Romney, who came out against the Fair Tax in the last debate, noting, quite sensibly and correctly, that it would cut taxes for the rich while increasing them on middle income families.

Former CEO of Godfather’s Pizza Herman Cain had a strong weekend, winning the Florida Straw poll with a surprising 37 percent of the vote. ABC News notes that his success was partially due to his ability to ‘strike a chord’ with his “9-9-9” tax plan, which he also touted proudly during the debate. His plan would replace the entire federal tax system with a 9 percent national sales tax, 9 percent income tax, and 9 percent business flax tax. As we’ve pointed out before, every aspect of this gimmicky and regressive plan would mean higher taxes on lower and middle income families and much lower taxes on the wealthy.

Former House Speaker Newt Gingrich took the debate as an opportunity to – and not for the first time – rewrite fiscal history by claiming that his ‘leadership’ led to four consecutive years of balanced budgets. We’ve said it once, we’ve said it twice, and we’ll say it again: sorry Newt, you never balanced the budget.

Watch this space for reviews of all things tax as the political campaign season kicks into high gear.

As soon as you thought you’d finally had a chance to catch your breath from last week’s Republican debate, the candidates were at it again Monday at CNN’s Tea Party Debate. As you may have to come to expect from anything associated with the Tea Party, the debate was heavy on misinformation about tax policy.
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Here are some of the tax-related highlights and missteps:

Former Massachusetts Governor Mitt Romney made misleading statements about President Barack Obama’s tax record, claiming that Obama “had raised taxes $500 billion.” What’s deceptive about this is that while Obama raised taxes by $500 billion dollars (mostly through the progressive tax included in the healthcare reform bill), he has simultaneously cut taxes overall by more than double that. Specifically, Obama cut taxes by $243 billion as part of the economic recovery act in 2009, $654 billion as part of the tax compromise he signed at the end of 2010, and is now proposing $240 billion in additional payroll tax cuts, to say nothing of his proposal to continue 81 percent  of the Bush tax cuts and other smaller tax cuts at a cost of an additional $3.5 trillion.

Later in the debate however Romney got it right when asked by a member of the audience if he supported the so-called Fair Tax (a proposed national sales tax). Romney expressed skepticism toward the proposal saying that it would decrease taxes for the “very highest income folks” while increasing taxes for “middle income people.” An analysis by the Institute on Taxation and Economic Policy confirms this point showing that a Fair Tax would primarily benefit the super-wealthy, while increasing the taxes paid by the bottom 80 percent by more than half.

While rejecting the radically regressive Fair Tax may seem like a logical move for any presidential candidate who wants to be taken seriously, Romney is actually bucking at least half of the Republican field (and most notably current front-runner Texas Governor Rick Perry) who have come out in favor of it. 

Minnesota Rep. Michele Bachmann attempted to rewrite fiscal history by claiming that the reason the deficit went “up and up and up” during the past decade was not due to the Bush tax cuts, but rather trillions in increased spending. In reality however, the Bush tax cuts were the primary driver of the deficit during the Bush years, adding some $2.5 trillion to the deficit from 2001-2010.

Bachmann went on to call for a tax repatriation amnesty, making herself the latest of the GOP presidential candidates (joining with Herman Cain and Rick Santorum) to explicitly call for a tax amnesty during the debates. Bachmann and the other candidates all claim the amnesty will create jobs, though in reality it will actually encourage companies to move more jobs and profits offshore.

Former House Speaker Next Gingrich brought up the topic of General Electric’s negative corporate tax rate in attempt to bash Obama’s choice of GE’s CEO Jeffrey Immelt as an adviser. Gingrich’s goal was to score points by arguing Obama’s choice of Immelt contradicts his own call to close tax loopholes.

Gingrich proceeded to contradict his own argument by saying that he is “cheerfully opposed” to raising taxes by closing the sorts of corporate loopholes that benefit GE and other corporations, while also conveniently leaving out that he actually works as an advisor to GE.