President Barack Obama and his Republican rival, former Massachusetts Governor Mitt Romney, engaged in a lively and at times ferocious debate that covered a range of topics, including taxes, the economy, Libya and women’s health.
Like what you see? Click here to sign up for Accounting Today's daily newsletter to get the latest news and behind the scenes commentary you won't find anywhere else.
Obama took a more aggressive stance during Tuesday night’s debate at Hofstra University in Hempstead, N.Y., in an effort to make up for lost ground after a subdued performance during their first debate two weeks ago swung the poll numbers in Romney’s direction (see Romney Debates Obama, Says He May Need a New Accountant).
Obama took aim at Romney’s tax plan. “Governor Romney doesn’t have a five-point plan,” he said. “He has a one-point plan. And that plan is to make sure that folks at the top play by a different set of rules. That’s been his philosophy in the private sector, that’s been his philosophy as governor, that’s been his philosophy as a presidential candidate. You can make a lot of money and pay lower tax rates than somebody who makes a lot less. You can ship jobs overseas and get tax breaks for it. You can invest in a company, bankrupt it, lay off the workers, strip away their pensions, and you still make money. That’s exactly the philosophy that we’ve seen in place for the last decade. That’s what’s been squeezing middle-class families.”
Romney was asked by a voter in the audience about his tax reform plan and whether it would require eliminating various deductions such as for mortgage interest, charitable contributions, the child tax credit and education credits. “I want to bring the rates down, I want to simplify the tax code, and I want to get middle-income taxpayers to have lower taxes,” Romney responded. “And the reason I want middle-income taxpayers to have lower taxes is because middle-income taxpayers have been buried over the past four years. You’ve seen, as middle-income people in this country, incomes go down $4,300 a family, even as gasoline prices have gone up $2,000. Health insurance premiums, up $2,500. Food prices up. Utility prices up. The middle-income families in America have been crushed over the last four years. So I want to get some relief to middle-income families.”
Romney declined to specify which deductions he would eliminate, but he stressed that they would only be limited for upper-income taxpayers earning more than $200,000 a year. “Now, how about deductions, because I’m going to bring rates down across the board for everybody, but I’m going to limit deductions and exemptions and credits, particularly for people at the high end, because I am not going to have people at the high end pay less than they’re paying now. The top 5 percent of taxpayers will continue to pay 60 percent of the income tax the nation collects. So that will stay the same. Middle-income people are going to get a tax break.”
Romney explained that he might allow upper-income people to choose for themselves which tax deductions they would take. He and his running mate House Budget Committee chairman Paul Ryan, R-Wis., had previously said they would leave that to Congress to decide once he was elected to office.
“And so, in terms of bringing down deductions, one way of doing that would be say everybody gets—I’ll pick a number—$25,000 of deductions and credits, and you can decide which ones to use,” he said. “Your home mortgage interest deduction, charity, child tax credit, and so forth, you can use those as part of filling that bucket, if you will, of deductions.”
Romney added that he would lower tax rates for capital gains, dividends and interest for the middle class. “But your rate comes down and the burden also comes down on you for one more reason, and that is every middle-income taxpayer no longer will pay any tax on interest, dividends or capital gains,” he said. “No tax on your savings. That makes life a lot easier. If you’re getting interest from a bank, if you’re getting a statement from a mutual fund or any other kind of investment you have, you don’t have to worry about filing taxes on that, because there’ll be no taxes for anybody making $200,000 per year and less, on your interest, dividends and capital gains. Why am I lowering taxes on the middle-class? Because in the last four years, they’ve been buried. And I want to help people in the middle class.”
Romney insisted that he would not reduce taxes for upper-income taxpayers. “I will not under any circumstances reduce the share that’s being paid by the highest-income taxpayers,” he emphasized. “And I will not, under any circumstances increase taxes on the middle class. The President’s spending, the President’s borrowing will cost this nation to have to raise taxes on the American people. Not just at the high end. A recent study has shown the people in the middle class will see $4,000 per year in higher taxes as a result of the spending and borrowing of this administration. I will not let that happen. I want to get us on track to a balanced budget, and I’m going to reduce the tax burden on middle-income families. And what’s that going to do? It’s going to help those families, and it’s going to create incentives to start growing jobs again in this country.”
Obama contended that Romney had previously pledged to cut taxes for people at all income levels, including the wealthy, in contrast with his own tax plan.
“Now, Governor Romney has a different philosophy,” said Obama. “He was on ‘60 Minutes’ just two weeks ago, and he was asked, 'Is it fair for somebody like you, making $20 million a year, to pay a lower tax rate than a nurse or a bus driver, somebody making $50,000 a year?' And he said, 'Yes, I think that’s fair.' Not only that, he said, 'I think that’s what grows the economy.'”
Obama argued that Romney had promised tax cuts for everybody during the primaries and had only recently changed his plan to limit deductions for upper-income taxpayers. “When Governor Romney stands here, after a year of campaigning, when during a Republican primary he stood on stage and said ‘I’m going to give tax cuts,’ he didn’t say ‘tax rate cuts,’ he said, ‘tax cuts to everybody,’ including the top 1 percent. You should believe him because that’s been his history. And that’s exactly the kind of top-down economics that is not going to work if we want a strong middle class and an economy that’s striving for everybody.”
Romney insisted that his tax plan would not cut taxes for upper-income people. “The top 5 percent will continue to pay 60 percent, as they do today,” he said. “I’m not looking to cut taxes for wealthy people. I am looking to cut taxes for middle-income people.”
Romney said he would also lower taxes for small businesses. “And why do I want to bring rates down, and at the same time lower exemptions and deductions, particularly for people at the high end?” he asked. “Because if you bring rates down, it makes it easier for small business to keep more of their capital and hire people. And for me, this is about jobs. I want to get America’s economy going again. Fifty-four percent of America’s workers work in businesses that are taxed as individuals. So when you bring those rates down, those small businesses are able to keep more money and hire more people.”
CNN correspondent Candy Crowley, who moderated the debate, asked Obama about Romney’s tax plan, and whether it would only cut taxes for the middle class. He contended that Romney’s tax plan did not add up and that it would “blow up” the deficit by $7 trillion to $8 trillion.