Presidential Debate Preview: What Obama and Romney Will Say About Taxes

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Mitt RomneyIn Wednesday's much-hyped verbal slugfest between Barack Obama and Mitt Romney, few topics will loom larger than taxes. They're a central battlefield for Republicans and Democrats, an area in which the two parties are fundamentally, philosophically divided. For much of the past four years, the Bush tax cuts, the capital gains tax rate, and the oft-repeated (and heavily spun) fact that 47% of Americans don't pay federal income tax have been at the heart of Washington's conflicts, and have often spilled over into other battles like the fights over health care reform and the debt ceiling.

Equally important, taxes are one subject upon which Obama and Romney are deeply divided personally. Romney has repeatedly and enthusiastically reiterated the Republican mantra that cutting taxes translates directly into economic growth. In his personal life, he has embodied that ideal, using a combination of deductions and preferential tax rates to keep his tax bill impressively low. In other words, when progressives take aim at tax reform, Romney is very much in the cross-hairs.

On Obama's side, the tax fight has left him with a political black eye. For years, he has endorsed plans to repeal the Bush-era tax cuts for the wealthy, while maintaining breaks for the poor and middle class. In this, he has been repeatedly stymied, which is one factor that led us to the fiscal cliff America is now peering over. His few tax-related victories, including the payroll tax holiday and the health care reform taxes, are modest, and his presidency has been plagued by his inability to significantly raise revenue.

With so much on the line, how will Obama and Romney frame the tax debate on Wednesday? Here are some likely talking points.

Taxes on the Middle Class


Most Americans define themselves as "middle class," and will likely respond to promises for economic help for that group. Any time a candidate can convincingly make the case that he is protecting the interests of the middle class, he will score points in the debate.

• What Obama Might Say: When it comes to middle class taxes, Obama has the option of resting on his laurels. The payroll tax holiday he championed in 2010 was a direct stimulus to the middle and lower classes, giving every earner making less than $110,000 per year what amounted to a 2% raise. But in January, that tax break is set to expire, along with Bush-era tax cuts that also benefit poor and middle class earners -- cuts Obama has repeatedly endorsed. For Obama, the best course may be to allow his record to speak for itself.

• What Romney Might Say: Romney's now-infamous attack on the 47% of Americans who don't pay federal income taxes hits a large number of middle class voters, a factor that Obama might well allude to in the debate. More importantly, the former governor's campaign has been extremely vague about its plans for middle class taxes. While Romney has proposed a 20% tax cut across the board, he has failed to explain in any detail how he would balance that out. According to many economists -- and notably, those at the nonpartisan Tax Policy Center -- Romney's plan is mathematically impossible: His tax cuts for the wealthy would either slash federal revenue or would have to be paid for by tax increases on the middle and lower classes.

Rather than focusing his efforts on rebutting those points or providing details about his plans, Romney has focused on discussing what Obama "might" do. In a campaign stop last week, he told his audience, "I admit this, he has one thing he did not do in his first four years, he's said he's going to do in his next four years, which is to raise taxes." On Wednesday, Romney is likely to continue down that path, attempting to shift the focus from Obama's record to his rhetoric.

• Potential Pitfalls: If Romney hopes to sell his tax plan, he needs to convincingly describe how he can offer tax breaks for the rich without picking everyone else's pockets. Thus far, he has avoided this battle by parsing the definition of "middle class," avoiding specifics on his tax proposal, and trying to redirect the discussion back to Obama. However, to sway moderates, he'll ultimately need to make his case clearly and effectively.

Taxes on the Wealthy


Taxes on the wealthiest Americans are near historic lows, which has resulted in a massive revenue shortfall for the government. Further, the outsized political voice granted to the ultra-rich by the Supreme Court's Citizens United decision means that neither candidate can afford to disregard the wealthiest 1%. Here are some ways that they might navigate this tricky -- and powerful -- segment of voters.

• What Obama Might Say: When it comes to dealing with the rich, Obama has had a long, difficult learning curve. In late 2010, he attempted to allow the Bush tax cuts on upper-income earners to expire. Ultimately, however, Congress compromised on a bill that retained all the tax cuts, including those benefiting the wealthiest taxpayers. Obama's later attempt to push a "Buffett Rule" that would raise taxes on millionaires was stalled by congressional Republicans.

As things stand, the Bush tax cuts on the wealthy will expire in January 2013, along with the 15% carried interest tax break, the current low capital gains and dividend tax rates, and the highly favorable inheritance tax rate -- all of which primarily benefit the rich. Obama has already begun a tentative outreach toward the wealthy, releasing a two-minute "Economic Patriotism" video centered on the idea that paying higher tax rates is a way for the rich to show their love for America. He may refer to this idea in the debates.

• What Romney Might Say: For Romney, taxes on the wealthy are a comfortable topic. His much-touted 14.1% 2011 tax rate demonstrates a familiarity with -- and tacit endorsement of -- the tax breaks available to the upper class, and his proposed 20% tax cut should more than seal the deal with asset-centric wealthy voters.

• Potential Pitfalls: As the campaign season peaks, things will get expensive for both candidates, and it would be in Obama's best interests to reach out to the wealthy. But even if his notion of economic patriotism falls as flat with the rich as his earlier "shared sacrifice" push did, it might still be a big seller with middle class voters.


Closing Tax Loopholes


While debates over taxes usually focus on the income tax rate, the real action might be on deductions, credits, and other loopholes that Americans use to lower their real tax rates. Cuts to these tax breaks, while less transparent than changes to tax brackets, could be the centerpiece of both Obama and Romney's tax strategies.

• What Romney Might Say: For Romney, loopholes could be a delicate issue. He asserts that his proposed 20% tax cut would largely be funded by closing loopholes for the rich, but has remained vague about how exactly this would be accomplished. This lack of clarity has already caused him some trouble, as the nonpartisan Tax Policy Center has determined that his numbers don't add up. Right now, his most likely path will be to stick with his assertion that his tax cuts won't increase taxes on the middle class, while trying to avoid discussing specifics.

• What Obama Might Say: For weeks, Obama pushed the Romney campaign to release details about which tax loopholes it plans to close. Recently, however, the president shifted focus; last week, he and Vice President Biden both suggested that Romney plans to cut the mortgage interest deduction, reduce dependent deductions, and begin taxing Social Security benefits. These three points, calculated to strike terror into middle-class hearts, paint Romney into a corner. If the Republican challenger ignores Obama's goads, he will be implicitly agreeing with them. To repudiate them, he will need to explain which loopholes he plans to close -- a path that is similarly fraught with peril.

• Potential Pitfalls: If Obama goes on the attack with Romney's loophole issues, he runs the risk of overplaying his hand, a move that could backfire. The Republican challenger, on the other hand, faces an even bigger problem: If he stays mum on the specifics of his tax plan, he could appear unprepared and unserious, but if he offers specifics, he may well offend potential voters. Caught between a rock and a hard place, a large part of the drama of Wednesday's debate will revolve around how Romney attempts to extricate himself from this trap.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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democracks0

Obamas trying to run on Clinton's record. But even Clinton said he was a better President than Obama and that Obamas in way over his head.

October 03 2012 at 11:52 PM Report abuse +1 rate up rate down Reply
democracks0

AWW poor Barack didn't like being challenged tonight so he ask the moderator to move to the next question.

Obama even tried to use Bill Clinton as a crutch because Obama has no record to run on.

October 03 2012 at 11:47 PM Report abuse +1 rate up rate down Reply
johnaltojr

he lost lets admit it

October 03 2012 at 11:17 PM Report abuse -1 rate up rate down Reply
democracks0

Where are all these better things Obama was lying about tonight.

I don't see all the relief that he lied about.

My kids are paying loans through the nose.

My insurance has gone way up.

Car insurance up

My home is worth less than what I paid for it. Thank God I don't owe a lot

Food prices sky rocketing.

Gas prices up

I see more homeless people walking the streets and people in food pantrys and soup kitchen lines in my neighborhood.

So where is this better that Obama lied about.

People are out of work millions!!!!

Who is getting all this help that Obama lied about tonight

All Obama spewed was the same crap that he said 4 years ago.

Oh that's right free cell phones and more foodstamps that's what Obama was talking about. But middle class people don't qualify for those things. Only the Obamite freeloaders do

October 03 2012 at 10:41 PM Report abuse -2 rate up rate down Reply
aaflyboy1

Bottom line….
Romney is for wealthy families!!!
IF YOUR A HARD WORKING AMERICAN, WHO PAYS THERE TAXES AND GETS SCREWED BY BANKS,HEALTHCARE COMPANIES AND INSURANCE COMPANIES. DO NOT VOTE FOR ROMNEY!
THESE PEOPLE ARE ROMNEYS FRIENDS!!
THESE PEOPLE ONLY CARE ABOUT HOW MUCH MONEY THEY CAN MAKE FROM YOU AND YOUR FAMILIES!
WORKING AMERICANS NEED:
1. SOCIAL SECURITY!
2. MEDICARE!
3. LOW PRESCRIPTION DRUG PRICES!
4. LOWER INSURANCE COSTS FOR OUR HOMES AND CARS!
WHO DO YOU THINK ARE THE CEOS OF THESE GREEDY COMPANIES?
REPUBLICANS!!!!! GREED=REPUBLICANS!
***************************OBAMA 2012********HOPE AND CHANGE? VOTE STRAIGHT DEMCORAT IN ORDER FOR PRESIDENT OBAMA TO GET BILLS PASSED! AFTER ALL, IT WAS JOHN BIENER, SPEAKER OF THE HOUSE WHO SAID ITS HIS JOB TO SEE THAT PRESIDENT OBAMA FAIL! UNPATRIOTIC!

October 03 2012 at 8:55 PM Report abuse +1 rate up rate down Reply
2 replies to aaflyboy1's comment
mumfred

greed is everywhere my friend. you're spouting off things you want faster than you can type, but have no interest in providing it for yourself. That's greed. Paying 6 % of a 30k salary into social security and drawing out hundreds of thousands of dollars once disabled or retired and expecting others to fund the difference. That's greed. Demanding high dollar health care but paying none or a fraction of the premiums and expecting the government to deliver these things. That's greed. Unapologetically taking things you never earned is far greedier than trying to hold onto a larger percentage of what you did earn. Thank about it.

October 03 2012 at 9:12 PM Report abuse rate up rate down Reply
democracks0

Obama said if he didn't cut the deficit and if unemployment wasn't under 8% he himself said he was a one termer. So Obama didn't need any help in becoming a one term president he accomplished that all on his own.

October 03 2012 at 10:46 PM Report abuse -2 rate up rate down Reply
palmspringslife

"Romeny investments included securities from companies with ties to Iran to investments in the state-owned Chinese oil company"

And now we understand why Mitt Romney was not eager to show us his tax return. I can't help wondering what those other undisclosed years of investments would reveal?
SO WHERE ARE THOSE PESKY TAX RETURNS OF YOURS MYTH ROMNEY???
I think Myth Romney may have just shot his presidential hopes in the heart.

October 03 2012 at 6:32 PM Report abuse +3 rate up rate down Reply
2 replies to palmspringslife's comment
mrspelosi

Oh how sad that you wander through life in a state of confusion dear. How unfortunate for you.

October 03 2012 at 7:16 PM Report abuse -2 rate up rate down Reply
ragtopdaz

Surprise, surprise. The man who claimed Mitt Romney hasn't paid taxes for ten years on the Senate floor because "someone" told him that was the case, is refusing to release his own tax returns. Reid, who lives in the Ritz-Carlton in Washington D.C. has gone from middle class to being worth more than $10 million during his time in the Senate.

Senate Majority Leader Harry Reid again deflected questions Monday about releasing his tax returns, even as he continued to pound the demand for Mitt Romney to make more of his own public.

Then we have the Botox Queen say the same..


House Minority Leader Nancy Pelosi (D-Calif.) pushed back hard Thursday against the notion that congressional leaders should release their tax returns, saying the standard applies only to presidential candidates.

“When I run for president of the United States, you can hold me to that standard,” Pelosi told reporters in the Capitol.

“The disclosure that we have is full and complete,” she added, noting that she's met all of the financial disclosure obligations required of Congress.

They write the laws that protect them from prison, as well as making money on insider trading..



Nancy Pelosi never read the health care bill but she sure read all the insider trading stock tips sent to her..
Nancy Pelosi Blocked Credit Card Reform While Investing Millions in Exclusive Visa Stock Offering


Former Speaker of the House–and current Minority Leader–Nancy Pelosi apparently bought $1 million to $5 million of Visa stock in one of the most sought-after and profitable initial public offerings (IPO) in American history, thwarted serious credit card reform for two years, and then watched her investment skyrocket 203%.
Her response to a reporter when asked about this was " What's your point? I did nothing wrong."

October 03 2012 at 7:51 PM Report abuse -2 rate up rate down Reply
1 reply to ragtopdaz's comment
beachbumforever5

She says she met all the disclosure required.....................didn't romney do the same?

October 03 2012 at 9:41 PM Report abuse -2 rate up rate down
ragtopdaz

Surprise, surprise. The man who claimed Mitt Romney hasn't paid taxes for ten years on the Senate floor because "someone" told him that was the case, is refusing to release his own tax returns. Reid, who lives in the Ritz-Carlton in Washington D.C. has gone from middle class to being worth more than $10 million during his time in the Senate.

Senate Majority Leader Harry Reid again deflected questions Monday about releasing his tax returns, even as he continued to pound the demand for Mitt Romney to make more of his own public.

Then we have the Botox Queen say the same..


House Minority Leader Nancy Pelosi (D-Calif.) pushed back hard Thursday against the notion that congressional leaders should release their tax returns, saying the standard applies only to presidential candidates.

“When I run for president of the United States, you can hold me to that standard,” Pelosi told reporters in the Capitol.

“The disclosure that we have is full and complete,” she added, noting that she's met all of the financial disclosure obligations required of Congress.

They write the laws that protect them from prison, as well as making money on insider trading..



Nancy Pelosi never read the health care bill but she sure read all the insider trading stock tips sent to her..
Nancy Pelosi Blocked Credit Card Reform While Investing Millions in Exclusive Visa Stock Offering


Former Speaker of the House–and current Minority Leader–Nancy Pelosi apparently bought $1 million to $5 million of Visa stock in one of the most sought-after and profitable initial public offerings (IPO) in American history, thwarted serious credit card reform for two years, and then watched her investment skyrocket 203%.
Her response to a reporter when asked about this was " What's your point? I did nothing wrong."

October 03 2012 at 6:08 PM Report abuse -2 rate up rate down Reply
thedukeoforange2

See what happens when the republicans are confronted with facts. They go Bonkers.

October 03 2012 at 6:00 PM Report abuse +2 rate up rate down Reply
4 replies to thedukeoforange2's comment
thedukeoforange2

This is not a surprise. Even some Republican policy experts admit in private that Romney’s promises simply don’t add up. To twist Abraham Lincoln’s famous formulation, the Romney campaign has decided it’s better to remain silent and be thought evasive than to reveal your plan and remove all doubt that you’re cutting taxes on the rich while increasing the deficit, raising taxes on the middle class and cutting programs for the poor.

October 03 2012 at 5:57 PM Report abuse +2 rate up rate down Reply
2 replies to thedukeoforange2's comment
pup2011

man put dat pipe down. you smokin to much man

October 03 2012 at 5:59 PM Report abuse -4 rate up rate down Reply
2 replies to pup2011's comment
thedukeoforange2

man you're black and blue from facts smacking you upside your face.

October 03 2012 at 6:01 PM Report abuse +2 rate up rate down
pup2011

man is you crazy or somethin. oh yea you on dat pipe.

October 03 2012 at 6:03 PM Report abuse -3 rate up rate down
lawmutt55

The Republicans will tell the Middle Class they lowered taxes because they lowered the tax rate. When they take away such things as the mortgage interest deductions and the deduction per child in the family, their actual taxes paid will go up.

October 03 2012 at 6:27 PM Report abuse +3 rate up rate down Reply
1 reply to lawmutt55's comment
mrspelosi

Oh my still wandering through life in a state of confusion. How unfortunate for you dear.

October 03 2012 at 7:17 PM Report abuse -2 rate up rate down
thedukeoforange2

Regressive Cuts
If Romney tries to pay for his tax cuts by reducing spending, the results, as the Tax Policy Center notes, would be even more regressive. Romney has promised to increase defense spending and hold benefits steady for the current generation of seniors. The only remaining big spending programs are those that help the poor; that’s where Romney’s cuts would have to be concentrated. Paying for tax cuts for the rich by curtailing programs for the poor is even more of a reverse-Robin Hood act than paying for tax cuts for the rich by cutting the tax expenditures (deductions and the like) of the middle class.

Mitt says he's for the middle class? You better think again!

October 03 2012 at 5:56 PM Report abuse +3 rate up rate down Reply
1 reply to thedukeoforange2's comment
pup2011

obama dont care bout no one but obama

October 03 2012 at 6:00 PM Report abuse -2 rate up rate down Reply