Understanding Romney’s Approach to Taxes

 ‘Lower the Rates, Broaden the Base’

By Steve Conover

Here’s a clarification of the concepts behind the Romney-Ryan proposal for tax reform.

Republican presidential candidate Mitt Romney has made tax reform a centerpiece of his campaign. His catchphrase description of the proposal is “lower the rates and broaden the base,” a concept that enjoys support not just from other Republican candidates, but also from Federal Reserve Chairman Ben Bernanke and the Bowles-Simpson Fiscal Commission.

But that catchphrase immediately introduces a problem: for the most part, only wonks know what “broaden the base” means. What follows is a two-step clarification of the concept.

For the income tax, “broadening the base” means increasing the amount of income subject to taxation — and there are two ways to do it. One way is to increase the “taxable income” line on the individual tax return. The second way is to increase the number of taxpayers in the economy, by accelerating the private sector’s job creation.

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