An editorial Oct. 5 refers to a Tax Policy Center study that finds that Mitt Romney’s tax plan would reduce federal revenue by $480 billion a year, an amount that fails to include any offsets from additional economic growth (Our View, “Romney’s tax claims in debate don’t add up”).

More recent research by economist William McBride for the Tax Foundation finds that the static revenue loss from Romney’s plan would be significantly less, $337 billion, and that after taking into account the plan’s positive effects on investment, jobs and income, the loss would be only $136 billion.

The plan is not quite revenue-neutral, but it can easily be made budget-neutral by closing tax loopholes for the wealthy, as Romney proposes, and by making badly needed spending cuts. Economists may disagree about the magnitude of the effects that lower tax rates have on economic growth, but virtually all agree that the effects are positive and that lower rates on investment returns are especially powerful generators of jobs, incomes and new tax revenues. This is why it is simplistic and misleading to claim that a one-year static revenue loss in Romney’s plan would result in a $5 trillion deficit over 10 years, as President Obama keeps insisting.

There is something in Romney’s plan for everyone to like: a much simpler tax structure, lower marginal rates, more income for personal consumption and lower rates on investment returns for middle- and lower-bracket payers, all of which would promote economic growth.

Should voters be willing to trade a dollar of lost federal revenue for a sizable multiple of that amount in economic gain? Yes, in a heartbeat.

Martin Jones is a resident of Freeport.

 

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