Democrats have homed in on a new line of attack against the Republican ticket — asserting that the budget plan written by Rep. Paul Ryan would all-but zero out Mitt Romney’s taxes.
“It says something about Mitt Romney that he’s picking someone who has a budget plan under which Mitt Romney would pay less than 1% in taxes,” Obama’s deputy campaign manager, Stephanie Cutter, said on CBS’ “Face the Nation.”
Whether the attack is true or not depends on which version of Ryan’s plan one looks at.
When Ryan unveiled his plan in 2010, it eliminated all taxes on capital gains, interest and dividends. Many wealthy Americans, including Romney, get most — or, in some cases, all — of their income through capital gains and investment returns, so the change would greatly increase the number of rich people paying no taxes.
Romney, himself, realized that idea could be politically damaging and opposed it during the GOP primaries.
During January’s primary debate in Tampa, Fla., Romney challenged Newt Gingrich over his support for eliminating all taxes on capital gains.
“Under that plan, I’d have paid no taxes in the last two years,” Romney said.
With Romney opposed to the idea, it’s no surprise that the latest version of the Ryan budget, which the House approved this spring, leaves the fate of capital gains taxes uncertain. The plan would change the income tax by moving from the current six rates to two — 10% and 25% — and would cut other taxes to the tune of $4.5 trillion over the next decade, over and above the tax cuts enacted under George W. Bush, which it would keep in place. But it makes no specific proposal about capital gains.
That’s why Democrats, in their critiques, have focused on the 2010 version, as in this quote from Obama senior strategist David Axelrod on CNN’s “State of the Union” program: “Congressman Ryan had a proposal in 2010” that would have meant that “Gov. Romney would pay less than 1% on his taxes.”
Ryan’s congressional financial disclosure form shows substantial investments, suggesting he, too, might benefit from eliminating taxes on capital gains, but until he releases his tax returns, the precise savings are unknown.
While Ryan has gone quiet about the specifics, he has kept intact his rationale for opposing capital gains taxes. The more you tax something, the less of it you get, he wrote in the report that accompanies his budget, so capital gains taxes reduce funds available for investment. “Tax reform should promote savings and investment,” he wrote. “More savings and investment mean a larger stock of capital available for job creation. That means more jobs, more productivity, and higher wages for all American workers.”
As Democrats will be happy to point out, it also means huge tax savings for people like Ryan’s running mate.