Toomey budget offer gives a feel for what a Romney presidency would be like

By James Pethokoukis

Democrats didn’t much like Senator Pat Toomey’s SuperCommittee budget offer. But it might not be the last time they see something like it:

The GOP offer would raise about $250 billion over 10 years by using some variation of economist Martin Feldstein’s proposal that no combination of deductions could exceed, say, 2 percent of a taxpayer’s adjusted gross income. That’s a big revenue hit, especially for earners in the top tax brackets who benefit more from tax breaks. … In return for these cuts in deductions, Mr. Toomey says the top individual tax rate would fall to 28 percent from 35 percent, with the other tax-rate brackets falling by similar proportions. … Another $40 billion or so in new revenue would come from changing the formula for adjusting tax brackets for inflation. And $200 billion more would come from a variety of asset and spectrum sales, user fees, tax compliance and other things—all scored on a static basis by the Joint Tax Committee.

That’s how it would play out in a Romney administration right? Eliminate tax breaks, with some of money paying for lower rates, some for deficit reduction. Bowles-Simpson style. Certainly if the corporate tax rate is lowered—which Romney is in favor of—the top personal income tax rate would need to be dropped as well.

Also recall that Romney would cap federal spending at 20 percent of GDP. Getting revenue to match or approach that level would require tax increases, more revenue from faster economic growth via tax reform, or both. A team of AEI economists put together a budget proposal that found the following:

Recognizing the costly health and welfare burdens imposed by an aging population, our revenue target is 19.9 percent of GDP. Although somewhat above the historical average, this level of revenue is far below the disturbingly high levels (greater than 23 percent of GDP in 2035) that would result from leaving current law in place. Holding the revenue share to 19.9 percent will require the type of aggressive spending discipline outlined in this proposal. We also propose fundamental tax reform to ensure that additional revenues are raised in a manner conducive to long-run economic growth.