This month the Mitt Romney campaign offered a one-page economic plan, Mitt Romney’s Plan For A Stronger Middle Class. One of the points of the plan focuses on what they call “small business.” So what does the Romney plan do for small business? Let’s take a look.
This week I am looking at the Romney economic plan. One component of the plan is “Champion Small Business.” These are the points of that part of the plan:
• Reduce taxes on job creation through individual and corporate tax reform
• Stop the increases in regulation that are tangling job creators in red tape
• Protect workers and businesses from strong-arm labor union tactics
• Replace Obamacare with real health care reform that controls cost and improves care
The Tax Component
According to the Romney campaign website the Romney tax plan is:
- Make permanent, across-the-board 20 percent cut in marginal rates
- Maintain current tax rates on interest, dividends, and capital gains
- Eliminate taxes for taxpayers with AGI below $200,000 on interest, dividends, and capital gains
- Eliminate the Death Tax
- Repeal the Alternative Minimum Tax (AMT)
Tax Cuts: The 20% cut promised by Romney is above and beyond the “Bush tax cuts.” Romney has promised this “reform” would be “revenue neutral” meaning the same amount comes in because they will eliminate existing deductions. An independent analysis of Romney’s plan by the organization that Romney cited as fair and objective when he was denouncing the tax plans of his primary opponents says that Romney’s plan would dramatically lower the taxes of the very wealthy, while increasing the taxes of most of the rest of us by an average $2,000 per year.
So instead of cutting taxes this plan really shifts the tax burden even further from the wealthy, onto the rest of us. Conservatives explain this is necessary because right now the wealthy pay a very large percentage of all income taxes.
Keep Capital Gains Rate Low: The current low capital gains rate is supposed to be an “incentive” to get the wealthy to invest — because making a ton of money from an investment is not enough of an incentive. Capital gains is the income you get for having a lot of money. The reason the rich get most of their income from capital gains is because the capital gains tax rate is low, and the reason the capital gains tax rate is low is because the rich get most of their income from capital gains.
Eliminate the Estate Tax: The “death tax” is an income tax on the income of the children of the extremely wealthy. It is necessary to eliminate this tax because the rich really are different from you and me. They have more money. Therefore they shouldn’t be taxed.
The purpose of the estate tax is to fight the development of vast family fortunes that undermines democracy and leads to a system of aristocracy. Some argue that estate taxes are much fairer than income taxes because income taxes “disincentivize” work. (But others argue that people will work more to make up for what is taxed.)
Eliminate the Alternative Minimum Tax: This is a minimum tax on high incomes, put in place to fight the use of tax schemes by the wealthy.
The individual tax part of the Romney plan is entirely about shifting taxes away from the wealthiest few, and onto the rest of us — including onto small business owners. “Small” business owners don’t make enough to benefit from the Romney plan. (Note – a 5% tax increase on income above $250K means that someone making $250,001 would pay an additional 5 cents of tax.)
Romney promises to:
- Cut the corporate rate to 25 percent
- Strengthen and make permanent the R&D tax credit
- Switch to a territorial tax system
- Repeal the corporate Alternative Minimum Tax (AMT)
Cutting the corporate tax rate from the current 35% to 25% cuts taxes on corporations by almost 1/3.
A Territorial Tax System means no taxes on foreign income. This gives corporations an incentive to move everything they can out of the country — every job, every factory. After the goods are manufactured, transfer to a subsidiary in a tax-free country at a low price, then sell into the US at a high price,so the profits are made in the country that does not tax.
So the corporate part of the tax plan shifts our jobs out of the country! It benefits the billionaires who own giant multinational corporations — and helps them kill off small businesses.
The”Excessive” Regulations Component
The Romney campaign claims on their website that there is a “regulatory burden on our economy,”
Regulations function as a hidden tax on Americans, with the federal government’s own Small Business Administration placing the price tag at $1.75 trillion annually—much higher than the entire burden of individual and corporate income taxes combined.
Specifically cited at the Romney campaign website are the Dodd-Frank law regulating banks, passed after the financial crash caused by deregulating banks. This portion of the plan helps the giant “too big to fail” banks — not small businesses.
Also the Romney campaign says the EPA is engaged in a “war on carbon dioxide.” This portion of the plan helps giant oil and coal companies heat the planet — not small businesses.
The list of regulations Romney will eliminate includes:
- Repeal Obamacare
- Repeal Dodd-Frank and replace with streamlined, modern regulatory framework
- Amend Sarbanes-Oxley to relieve mid-size companies from onerous requirements
- Initiate review and elimination of all Obama-era regulations that unduly burden the economy
Tort Reform: Among the remedies on the Romney campaign website for this “over-regulation,” the Romney campaign promises to “reform legal liability system to prevent spurious litigation.” This means limit the right of people and government to sue corporations that cause harm. In a statement about eliminating regulations — the ability of We, the People to prevent corporations from harming us and the environment — the Romney campaign is also promising to limit the ability of citizens to sue for damages after corporations harm us or the environment.
The Romney campaign is promising to stop government (us) from preventing corporations from doing harm and stop government (us) from doing anything about it after they cause harm.
(Regulation “costs” us $1.5 trillion annually! Heh. How much did deregulation cost us when the Deepwater Horizon blew up, and when the financial sector imploded?)
The “Protect Workers” From Unions Component
This is a big one. After We, the People banding together in government breaks down, as it has, the key mechanism left for We, the People have to band together to fight the power of the billionaires and their big corporations is to form labor unions. But Mitt Romney wants America to be more “business friendly,” and unions are in the way.
I covered Mitt on on unions in May, in Romney Says Obama “Takes His Marching Orders” From Unions,
People who follow Romney’s line of reasoning think that we need to be more “business friendly” with low wages, low benefits, low environmental protections and low taxes on the rich so we can compete with countries like China. Here’s the thing, in countries like China the people don’t have a say. When people have a say they say that they want higher wages, benefits, good schools, environmental protections and the rest of the prosperity that democracy brings to all the people, instead of huge amounts accumulating in the hands of just a few people.
[. . .] Romney made his fortune buying up companies (not, by the way, using his own money, but using the companies’ own assets as collateral for the loans to buy them with). Then Romney fired many of the workers, making the rest do the extra work. He cut wages and benefits for the rest and then pocketed that money for himself. This is the guy who says that good wages and benefits is what puts companies out of business. In other words, Romney is saying that the problem with our economy is that we have a middle class. Romney wants America to be more “business-friendly.”
Romney says that he will fight against rules like “card check” that help workers to organize in hostile corporate environments, and against enforcement of existing labor laws such as the NLRB’s effort to enforce rules prohibiting corporate retaliation for lawful union activity.
Finally, The Replace Obamacare Component
Obamacare is based on something called … wait for it … Romneycare. The idea of Romneycare and Obamacare is that instead of moving to a “public,” or “socialized” health care system in which the government either provides the health care like in the UK, or is the single payer for health care like Medicare, instead the government requires everyone to purchase health insurance from a private company and subsidizes that purchase for people below a certain income.
As Governor of Massachusetts Romney implemented this conservative health care system. But now that Obama has implemented a similar system nationally, he is against it. He was for it before he was against it.
Wait — Didn’t It Say “Small Business?”
Hey, wait. Wasn’t this supposed to be about “small business?”
The plan included tax cuts for the wealthy, cutting regulations on huge banks and oil companies, getting rid of unions so giant multinationals can make us more like China, and repealing the health care law.
There is nothing in Romney’s “small business” plan that does anything for small businesses.
Yes, It’s That Crazy
Yesterday, in Romney’s Shifty Economic Plan – The First Challenge Is Believing It I explained that one problem with Romney’s plan is that people just do not believe that Republicans are actually proposing to do these things, and you sound like a crazy extremist if you just explain their plan,
Many people just can’t believe that the Republicans have become as extreme as they have become. As described in a NY Times Magazine story on SuperPacs last month,
For example, when Priorities informed a focus group that Romney supported the Ryan budget plan — and thus championed “ending Medicare as we know it” — while also advocating tax cuts for the wealthiest Americans, the respondents simply refused to believe any politician would do such a thing.
Summary: The Romney/Republican plan shifts the things We, the People (government) do for each other on to each of us on our own, alone against the wealthy and powerful.
Tomorrow: the Romney plan to cut the deficit. Yes, today was a plan to cut taxes by another 20%, and then he promises to cut the deficit.