With the presidential debates forcing the Democratic Chorus off its Obama-led character assassination-of-Romney theme and into actual public policy issues, the tune has changed. From Obama spokesmen to Detroit Free Press writers to ABC’s Martha Raddatz to Saturday Night Live, the new Democratic line is: Which loopholes would the Romney-Ryan tax plan close?
The question is a strategy meant to detour the GOP campaign from broad economic themes into the special interest weeds (like the Big Bird flap on the “what programs would you cut?” question). In truth, the tax code is a Swiss cheese of loopholes for powerful lobbies – which is precisely why the code needs to be streamlined and why any credible candidate – Republican of Democrat – leaves the details for the bargaining table.
Take Mitt Romney’s tax-reforming political twin, Michigan Governor Rick Snyder.
Like Romney, Snyder is a private equity, business turnaround specialist who made tax and spending reform his primary goals as a candidate in 2010. But in his “10-point plan to reinvent Michigan,” the tax reform details were limited to this:
“Point #2 Reform Michigan’s Tax System. Rick believes that we need to reduce the tax burden on families and businesses in Michigan. Rather than advocate for short-term solutions ” Rick wants to reform Michigan’s tax system so that it is competitive, simple, fair, transparent, efﬁcient and facilitates economic growth.”
That’s all, folks.
On the campaign trail, he stuck to the broad outline, eschewing specifics save that he wanted to eliminate the Michigan Business Tax and replace it with a flat corporate income tax (Romney has also specified that he would like to eliminate the dividend tax and cut income rates by 20 percent) while closing tax loopholes (a mirror of Romney).
Upon entering office, One Tough Nerd followed through on his tax reform promise – and also brought specifics to the Legislature. It’s easy to see why he didn’t provide those details in the campaign. Tax loopholes, after all, come with very large special interest constituencies.
As governor, Snyder proposed a simplified tax structure of a 6 percent corporate tax and a reduction to 4.25 individual income tax. To maintain revenue neutrality, he eliminated tax credits like Big Hollywood’s 42 percent film subsidy and introduced a new tax on pensions (Michigan being one of the few states that had exempted pensions from taxation).
The elimination of tax goodies caused a storm of protest from the lobbies that had protected them: seniors, the film industry, and so on. Snyder fought each battle and eventually won most of what he wanted from the Legislature. But had Snyder proposed these details during the campaign, his candidacy would have been derailed into putting out special interest brush fires. It’s the same reason that Romney won’t let Obama & Media distract his tax proposal.
Campaigns are for broad themes. Governing is for the details.