Fresh out of the gate after basically gaining the Republican nomination for president, Mitt Romney has stumbled. He has been stung by attacks on his reported wealth of $250 million; and by President Obama's call for a new "Buffet Rule" tax, named after billionaire Warren Buffet, of a 30 percent minimum tax on millionaires.
In response, Romney called for ending second-home mortgage deductions for wealthy people as part of his tax-reform proposals. We're interested in any ideas he and President Obama come up with. As the Beatles sang, "You say you got a real solution. Well, you know, we'd all love to see the plan."
But unless Mr. Romney's idea is part of comprehensive tax reform and reduction, it could do more harm than good. The real estate market has been hammered now for five straight years, with no recovery in sight.
Many people, wealthy as well as middle-class, buy a second home to rent it out and earn extra income. Cutting out that second mortgage deduction, even if just for the wealthy, would reduce the value of those homes. That would affect the whole real-estate market, as most other homes would decline in value.
Romney's staff said his statement was made at a private meeting — and he was just throwing out ideas. Perhaps. But he's not just an ex-governor of Massachusetts now. He has a good chance at being the next president.
He has put forth some decent ideas. He wants to cut everybody's tax rates by 20 percent. That would drop the top tax rate to 28 percent from 35 percent. He should have just stopped there. Even as part of a comprehensive reform, things would be made more complex with a two-tiered tax system on second homes, allowing it for the middle-class, but not the wealthy. We don't need even more tax forms.
Moreover, although comprehensive tax reform would be nice, what's needed right now as the economy still continues to stagnate is a quick shot of adrenaline in the form of sharp cuts in tax rates. And the tax cuts should be permanent, unlike the 2003 Bush tax cuts, which nowadays have had to be renewed a couple of times a year, casting a pall of uncertainty across business and personal budgets.
A good plan would be to follow the 1981 tax cuts of President Reagan, whom Romney and all other modern Republicans profess to admire. The Gipper campaigned on a platform of major cuts, and delivered once in office as the top marginal tax rate was slashed to 50 percent from 70 percent. Later, he worked for more tax cuts — and, unfortunately, for some tax increases he later regretted. He left office with the top tax rate 28 percent, less than half what he inherited, the rate Romney wants to return to.
But the key was the initial 1981 cuts that undergirded more than two decades of prosperity until the recent uncertainty and stagnation. Obama, of course, unfortunately is running a campaign of envy against "the rich," otherwise known as business owners, investors and jobs creators.
Romney, with a history of flip-flops on the issues, as the challenger needs to solidify his position as a disciplined, Reaganesque tax cutter, not as a flighty candidate who throws out unformed ideas like daisies on a pond.
REPRINTED FROM THE ORANGE COUNTY REGISTER