- Joined
- Apr 13, 2011
- Messages
- 34,951
- Reaction score
- 16,311
- Gender
- Undisclosed
- Political Leaning
- Socialist
The effect of Romney's plan
Knowing all that, the Tax Policy Center, a joint project of the Urban Institute and Brookings Institution that evaluates tax proposals submitted by presidential candidates, examined the effect of Romney’s tax rate cuts combined with the elimination of several common tax deductions. Those include the mortgage interest deduction, charitable giving deduction and the exclusion for health insurance. The center published its findings on Aug. 1, 2012.
To try and keep with Romney's guiding principles, the authors eliminated deductions and write-offs -- starting with the deductions for top earners first -- until they came up with enough revenue to offset the $360 billion in tax cuts that are part of Romney's plan.
They determined that people who earn $1 million or more in taxable income would see an average net tax decrease of $87,117. They’d save $175,961 from Romney's tax cut, but lose $88,444 in deductions.
"They would still get a tax cut," said Adam Looney, one of the authors. "The dollar value of the tax cuts is just way bigger than the mortgage interest and other deductions. There’s no way to implement this plan in a way that doesn’t result in a pretty big tax cut for that group (those making more than $1 million)."
People who earn between $500,000 and $1 million would see a cut of about $17,000, and taxes for people with incomes between $200,000 and $500,000 would decrease by about $1,800, the study found.
But to make Romney's plan revenue neutral, deductions would also have to be removed for people with incomes below $200,000, and the effects of that would be significant, the study found. In fact, the elimination of the deductions would mean outright tax increases for everyone with incomes below $200,000. People with taxable income between $50,000 and $75,000, for example, would see an average net tax increase of $641. They’d save $984 from Romney's rate cut, but lose $2,672 in write-offs.
The authors specifically noted that taxpayers with children whose income is below $200,000 would see their taxes go up by an average of $2,041 -- the figure highlighted in Obama’s ad.
The reason for the increase is that the most popular tax breaks heavily benefit middle- and lower-income families, the 95 percent of the population earning less than $200,000 who carry mortgage debt and use employer-provided health insurance.
And though Romney has suggested he would focus on taking the deductions away from the wealthy, the study concluded that alone would not make up the difference of the revenue sacrificed when rates are slashed.
"Somebody has to foot the bill for those tax cuts," Looney said. "You have to tap into middle- and lower-income households."
Bottom line: the study found that Romney couldn't keep all his goals based on what we know about his plan."
http://www.politifact.com/truth-o-m...ma/obama-romney-would-cut-millionaires-taxes/