Does Romney's Tax Plan Really Cost $5 Trillion? Not at All

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You might have heard it on the campaign trail, on cable news, in liberal op-eds: Mitt Romney wants to cut taxes by $5 trillion.

It's not true. Mitt Romney has never proposed a tax plan that would cut revenue by $5 trillion. But here's why the little fib exists.

Mitt Romney has proposed cutting federal income tax rates by 20 percent, a change that, on its own, would lower revenue by almost $5 trillion over the next 10 years. But he's also proposed cutting tax spending by the same amount; keeping today's low rates for families making less than $250,000; and keeping the current tax burden on the highest earners. These proposals cannot all be true at the same time, according to analysis from the Tax Policy Center. In fact, the Romney tax plan is something of a myth.

But liberals risk constructing a parallel myth when they suggest that Romney's plan would cut taxes by $5 trillion when in fact his proposal is to cut taxes by zero dollars. If you don't believe his plan, then you don't believe his plan. If you think he's lying about his plan, then you think he's lying. But there's a big difference between saying Mitt Romney's lying/has proposed a fantasy tax plan and saying Mitt Romney's tax plan cuts taxes by $5 trillion. The first is opinion. The second is false.

My opinion is that Romney's plan is too vague to say practically anything about it. If Romney wants to cut tax rates by 20 percent, he's proposing a plan that almost certainly loses revenue. If he's proposing a plan that doesn't lose revenue or raise taxes on upper-middle class famlies, then the most specific element of his plan has to go. In fact, I think the president aptly criticized its vagueness in the debate:

"Now, Governor Romney's proposal that he has been promoting for 18 months calls for a $5 trillion tax cut, on top of $2 trillion of additional spending for our military. And he is saying that he is going to pay for it by closing loopholes and deductions. The problem is that he's been asked over 100 times how you would close those deductions and loopholes, and he hasn't been able to identify them."

But the campaign trail, he's played a little fast-and-loose with that $5 trillion figure:

"My opponent, he believes in top-down economics, thinks that if you spend another $5 trillion on a tax cut skewed toward the wealthy that prosperity will rain down on everybody else," the president said at a campaign event in Milwaukee.

Let's be clear. Romney hasn't proposed a tax plan that adds up to negative-$5 trillion. He's proposed a tax plan that adds up to practically nothing, at all.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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