Romney's Economic Stimulus Plan:
- Reduce the lowest income tax bracket to 7.5%.
- Eliminate payroll taxes on seniors.
- Eliminate savings, capital gains and dividend taxes for those earnining less that $200,000.
- Reduce the corporate tax rate to 20%.
- Allow 100% expensing of equipment for two years.
- Expand Federal Housing Administration (FHA) loan portfolio limits to allow larger loans to homeowners. Expand NeighborWorks program. (Source: MittRomney.com, The Romney Economic Stimulus Plan, January 19, 2008)
Romney's 2008 Economic Platform:
Mitt Romney would push for a fivefold increase in spending on energy and automotive technologies. He would also overhaul the tax code and fight new regulations, including tougher fuel-economy requirements for cars and trucks that Congress recently passed and Bush signed into law.
- Make Bush tax cuts permanent.
- Cut all tax rates.
- Eliminate death tax.
- No increases in Social Security taxes.
- Pass amnesty "patch" for middle income taxpayers to avoid excessive Alternative Minimum Tax.
- Make Research & Development tax credit permanent.
Impact on the Economy:
Making Bush's tax cuts permanent won't affect the economy until 2010, when they expire. Since Romney proposes a patch on the Alternative Minimum Tax, it is unclear how much revenue would be lost. This would add to the budget deficit. His other proposals to cut taxes would put more money into consumers' hands, increasing spending and boosting the economy. Supply-side economics states that the growth will increase the tax base and ultimately offset the loss in revenue. Unfortunately this theory has never been proven.
Therefore, without a a decrease in spending, tax cuts would increase the budget deficit. This would put downward pressure on the dollar, increase inflation, and ultimately weaken the economy.
Increasing fuel economy may help decrease reliance on oil, thus lessening inflation. However, increased fuel economy often leads to more miles driven, so there may be no net improvement. Decreasing business taxes may help corporate profits, but may never find their way into lower prices, thus helping consumers.
For Romney's 2012 economic policies, see Mitt Romney 2012.