The Real Mitt Romney

[BigV]

Originally Posted by Flint

A. The rate is a rate of income being taxed, so when you reduce rates there is more money left to individuals as income, and less money received by the government as taxes.

B. Deductions are (in effect) a method of giving money back, so when you reduce deductions, there is less money received by individuals as returns, and more money recieved by the government as taxes.

Whereas A. and B. have opposite effects, the net effect is neutral (theoretcially--I'm not arguing feasability, just describing a simple flowchart), meaning no change. Neutral doesn't mean more.



I'm still struggling to identify the area which is difficult to understand.

deductions reduce the amount of income that is subject to taxation. a deduction is an amount of money you've spent during the year on a given thing(s). If those things fall into certain categories, the amount spent can be deducted from your gross income, repeat as necessary, until you get to your adjusted gross income, the amount that is subject to taxation. deductions are like exemptions, a certain kind and amount of income is exempted from taxation.

more deductions, more exemptions, more money excluded from taxation, and for a given rate of taxation, less tax collected.

by eliminating deductions, fewer deductions, fewer exemptions, less money excluded from taxation, for a given rate of taxation, more tax collected.

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Originally Posted by Flint

The way I understood him to be explaining it in the debate:

1. Reduce ‘individual’ tax rate
...a. Individuals in households pay less
...b. Individuals who own small businesses pay less
2. Tax revenues decreased at this point
3. Small businesses stimulated at this point
...a. Resulting in tax revenues going back up
4. Also, deductions eliminated for households
...a. Households end up paying the same amount

So. "Neutral doesn't mean more", neutral is neutral, ok, ok. Then where does *this* more money (in the pockets of people) come from?

Romney's said he'd reduce the tax rate. He's said he'd eliminate deductions to make the change revenue neutral. How is this going to make it possible for people to pay less in taxes?

What is it? Is it paying less in taxes or is it revenue neutral?