Tax questions that need answers at Obama-Romney debate
WASHINGTON (Reuters) - After months of rhetoric, the U.S. presidential candidates may offer voters some substance on taxes at their first debate on Wednesday, but only if they face tough questions.
Here are some questions worth asking Democratic President Barack Obama and Republican challenger Mitt Romney on taxes.
The 2013 federal budget will be about $3.8 trillion, but the tax code will only bring in $2.9 trillion. That will result in a $900 billion deficit. Most experts say this problem - which has already damaged the nation's credit rating - cannot be addressed without putting both spending and taxes on the table.
Do you agree with that view and if not, why not?
The tax code has not been fully overhauled in 26 years. Politicians often talk about fixing it, but so far, no Congress or White House has been able to match President Ronald Reagan's historic, bipartisan 1986 tax reform.
If elected, would you tackle tax reform? If so, how would you overcome Washington's stubborn fiscal gridlock?
One of the key aspects of the Reagan tax reform was that it was revenue-neutral, meaning both sides pledged to ensure that any changes made would not raise taxes overall. Are you willing to make a similar pledge? If not, why not?
The federal government has three big revenue streams - individual income tax, payroll tax and corporate income tax. These will account for 92 percent of all U.S. tax revenue in fiscal 2013.
Individual income tax next year will equal about 8 percent of gross domestic product; employment tax, 6 percent; and corporate income tax, 2 percent. These figures have not changed very much since World War Two. Taxation's bite on the economy has been stable as well. The total federal tax take has been between 15 to 20 percent of GDP annually for the past 60 years.
Earlier this year, some Republicans were calling for big changes. Remember Herman Cain's 9-9-9 plan and Newt Gingrich's flat tax? Is there a need for basic changes in the code, such as eliminating a tax or two and instituting new ones? Perhaps a value added tax, which is common elsewhere in the world?
If not, how can the existing tax code be fixed so that it generates enough revenue?
INDIVIDUAL INCOME TAX
Since President George W. Bush's tax cuts in 2001 and 2003, the top individual income tax rate has been 35 percent.
From 1987 through 2002, the top rate bounced around between 39.6 percent and 28 percent. Before then, it was much higher: 50 percent from 1982 to 1986; about 70 percent from 1965 to 1981; and from 1950 through 1963, it was over 90 percent.
In view of these figures, would you say today's tax rates, especially at the top, are too low, too high or on target?
THE 47 PERCENT
Governor Romney said at a fundraising dinner earlier this year that 47 percent of Americans do not pay income tax.
This assertion is supported by research from 2011. However, it is also true that almost two-thirds of those who paid no income tax last year did pay payroll tax. And they would also have been subject to state and local sales and property taxes.
Half of those not paying the income tax were exempt because they had little or no income. Many were elderly or students; many were eligible for credits to help children and the working poor.
If elected, would you move to repeal tax provisions to help the poor, the elderly and children? Would you require that all Americans pay some income tax, as some Republicans are discussing?
On December 31, unless Congress acts, the economy is in for some major shocks, including the expiration of the Bush tax cuts.
President Obama: You have said you want to keep Bush-level individual income tax rates in place for most Americans, but let rates rise for households with income exceeding $250,000. You have also said you want to raise the capital gains and dividend tax rates on those high-income households.
You proposed a substantially similar package in 2010, but then backed off. Whether or not you are re-elected, you will be in charge during the lame-duck session in November and December. Will you stick to your tax positions during that time? If so, why should the outcome be any different than it was in 2010?
Governor Romney: You have proposed making the Bush tax cuts permanent. But you also have proposed a 20-percent, across-the-board tax cut, to be paid for by closing tax breaks you have not identified. And you have said that under your plan, the wealthy would pay a share of taxes similar to what they pay today.
Critics say your plans don't add up mathematically and would raise taxes for the middle class, but cut them for the wealthy.
If you were elected, would you make the Bush tax cuts permanent or would you cut taxes by 20 percent? Or would you try to do one and then the other? If you cut taxes by 20 percent, what specific tax breaks would you try to close to pay for it?
CORPORATE INCOME TAX
Today's top corporate income tax rate of 35 percent is one of the world's highest, but few corporations pay anywhere near it due to abundant loopholes that lower their tax bills.
You have both proposed cutting the corporate tax rate: Obama to 28 percent; Romney to 25 percent. How would you pay for cuts of this magnitude and why are they needed?
(Editing by Howard Goller and Claudia Parsons)
- U.S.'s Kerry expresses regret to India over diplomat case |
- Mega Millions winners in Georgia, California to split $648 million |
- Washington, DC city council raises minimum wage to $11.50/hr in 2016
- China confirms near miss with U.S. ship in South China Sea
- Fed cuts bond buying in first step away from historic stimulus |
During Soviet times, Sochi gained a reputation for tolerance but the city's once vibrant gay scene has been shrinking as Russia prepares to host the 2014 Winter Games. Slideshow