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Economists Peter Morici and Lindsey Piegza on the study which the Obama Campaign claims will cause $5 trillion in future tax hikes on the middle class...
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-- those in this week reporting Mitt Romney's tax plan to the smell test.
President Obama insisted.
During the first debate that Mitt Romney's tax plan would raise taxes on the middle class Romney said that's not true.
But the Obama campaign came back -- -- well they have some university economist a look at the plan and agree with the president so.
I picked up the phone and I called the that the one of the economist who wrote this study Princeton professor Harvey Rosen and asked him point blank.
If Mitt Romney's tax plan would raise taxes on middle class families here's -- he told.
The paper that I wrote about the -- -- planned.
Does not say that it is not play it it does not imply -- attempts it's just not there are.
So so all they're saying something about my war costs which which just isn't there -- It just isn't there so did the president purposely -- for misrepresent that study and misrepresent Romney's tax plan.
Joining me now FDN financial economist Lindsey.
Peter let's start with you I mean this was.
An economist whose work was basically he's sane.
They -- used.
They absolutely did the facts are that if mr.
Romney lowers the rates as he plans to do.
And he has to eliminate deductions some people's taxes would go -- Other people's taxes would go down it doesn't necessarily mean the average on the middle class would be higher it would probably be.
About the same the strategy of the Obama people is to essentially throw these kinds of things out there -- the time has burned up.
With mr.
Romney having to dispel what are essentially lies -- let's be clear about this and that has noted that's how they have to deal with.
And let the fascinating part isn't dead that they're saying rob relied on going know it sounds like it's got to but Lindsay how how the big.
Where is is five trillion dollar number come from that they've made up.
Well there there's a lot of misleading numbers out their first -- -- starting with that five trillion dollar tax increase that excuse -- tax decrease.
-- the wealthiest Americans what they saw with the -- study saying that if we take a static moment in time and implement run these tax policy.
There would be a loss of revenue of about 40450.
Billion dollars what they did was multiply that by ten and that's -- we get that five trillion dollar number.
The problem is only 360 billion.
Was from individual income tax receipts are meaningless from corporate income taxes so again taking that differential multiplying it by ten already we've reduced that five trillion dollar number to lesson -- -- Alright Peter listen you guys you economists you know you've got -- that's a hard to keep I apologize but but listen I mean this issue you know -- -- -- -- static.
If if the static analysis is that there's a pie in the end it depends upon if you get a bigger piece than me or smaller piece than me.
But isn't the Romney plan isn't it and what Harvey Rosen of -- -- -- writing about was a dynamic analysis where.
If they changed tax -- -- your behavior would change and the high it will grow if the economy grows and we can all have a bigger piece upon.
Absolutely right now the present tax structure makes no sense.
It's as if it was written by the mad hatter in Alice in Wonderland.
The guy who owns a luncheonette in Manhattan has a couple of million dollars invested works eighty hours a week has white working alongside him.
You know that paying 20% of federal taxes without much problem.
While Mitt Romney and his friends on Wall Street mr.
Obama's written paper 14% -- on average and their question -- on that all the other taxes are up over 50%.
That makes no sense makes no sense at all it makes no sense that a a college rest -- that that that does speeches could pay that kind of rate but they do so by flattening -- structured getting rid of all these exemptions and so forth.
We cause people to make more reasonable decisions and that spurs growth more revenue and a help.
-- America.
You -- -- -- over what I think that's where the confusion comes -- because Rosen study does say that we could see a potential increase in tax revenue from families that make less than 100000 dollars.
But that's not necessarily result of an increase burden.
Or even an increase tax -- they -- making more money exactly what that is that base broadening and increasing growth income growth remember.
From a top down approach if you decrease the burden on the investor class.
Here increasing development business creation job creation and income growth which will benefit everyone regardless of where you are on the latter and that's where we see that increase in tax revenue.
Peter when you when you have a bunch of of fresh face -- senior class so don't they look at you with kind of glazed eyes when you make that.
And that economic Terry for the first time until late you -- -- -- -- a -- public like let's doesn't get the connection of that I I don't.
But yet you have -- parents -- a lot like the public mega juniors and seniors -- just finished their distribution requirement over in the college of humanities.
You know where they believe that you can have higher taxes and people invest even more -- -- -- CDO just released a study that said that but they also told us that obamacare wouldn't create any problems.
Yes it is -- hard sell when you've got that kind of propaganda coming out of left wing I think tanks and and out of -- frankly places like the CB out.
It's very very difficult but we do get throw it.
-- because you start to say look.
If you can make 20% on your money are you going to be more enticed to invest it at the same risk you can only make 15% -- yeah.
Well taxes on the difference between fifteen and 20%.
All right so you guys in the economic world do a lot of deep thinking but I asked what back -- to -- Rosen again over Princeton.
How could be a political campaign national presidential Obama campaign.
-- read the findings of the study this is -- he told.
Honest answers I don't know -- if I had to guess I'd say that page.
-- -- from junior staffer does too well to to review the paper around campaigns are rushed and hectic.
-- probably whoever the smartest Justin -- -- spent enough time.
Seymour was what was there are a bit about the statute I don't know.
-- Peter we're going back to those juniors and seniors again I think mother of a might have been the one it would decide to read it it's only seventeen pages long it's a pretty easy read.
Well the the basic problem here is -- I think mister Rosen is being too kind of the administration I think Joseph Biden and President Obama know exactly what you're doing.
They started out -- Labor Day would have -- believe and they try to run out the clock because they haven't lousy economy that there shamed out.
So it did it was they throw these things out a lot of time is spent during the campaign by the Romney people this spelling.
This this information yet instead of discussing the issues we're gonna see much more of this going forward in the debates so is it I mean that's the thing people can get.
Economic confuse the -- -- some dozen -- It was a very simplistic analysis whether or not they meant to represent misrepresent the study -- it's unclear but what we know is that they took a static analysis they ignored all the momentum that's created.
From net reduction of tax increases at the top.
And really misled the American people so it's it's very frustrated they bloated a study by five times the actual input.
What's the problem is is that they named the professor who did the study at all you got to call the professor you find out that the answer is totally different but Lindsey PH and Peter -- Both of you thank you very much thinking.
