Harvard economics professor Greg Mankiw, a former chair of the Council of Economic Advisers for President George W. Bush and current Mitt Romney economics consultant, has a handy blog post detailing the tax levels as a percentage of GDP for several economic plans based on information from former Bush administration economist Keith Hennessey.
The tax level cheat sheet goes like this:
- Over the past 50 years federal taxes have averaged 18% of GDP.
- Romney proposes taxes ‘between 18 and 19 percent’ of GDP.
- The Ryan budget proposes long-term taxes of 19% of GDP.
- President Obama’s budget proposes long-term taxes at 20% of GDP.
- The Bowles-Simpson plan proposes long-term taxes at 21% of GDP.
It seems simple and straightforward that Romney’s ideal tax burden would fall lower than President Obama’s and somewhere between the historical average and the Ryan plan. However, if Romney plans on having taxes fall between 18 and 19 percent of GDP, then that is obviously higher than 18 percent of GDP, the historical average for the last 50 years. That leads to the conclusion that Mitt Romney will raise taxes. He might not institute a general raise in marginal tax rates, and he might pursue the strategy of trying to promote more revenue through economic growth, but in a Romney presidency, taxes will generally be higher than average.
The less straightforward part of the tax level cheat sheet is the division of the tax burden. Who is paying taxes is as important as how much tax is paid. In this case, Romney’s tax plan comes out looking very bad for anyone who is not rich. In fact, the Tax Policy Center found that Romney’s tax plan, with what little details he has offered publicly, would raise taxes for 95 percent of American taxpayers while cutting taxes for the top 5 percent of earners. In other words, even though the overall tax burden is going down, the vast majority of people will see their tax rates rise. The tax rate cheat sheet conveniently leaves out these facts.