Mitt Romney's tax plan would provide large tax cuts to the very wealthy, while increasing the tax burden on the lower and middle classes, according to a study released Wednesday. The report -- produced by researchers at the Urban-Brookings Tax Policy Center -- illustrates just how difficult it would be to recoup government revenue lost under Romney's plan.
The presumptive Republican presidential nominee's tax plan calls for 20% cuts to today's Bush-era income tax rates. He would also eliminate the Alternative Minimum Tax. Those tax cuts would lead to a sharp decline in government revenue.
Yet Romney insists he will make up the difference in-part by limiting deductions, exemptions and credits currently available to top-level income earners. Romney refuses to say which tax breaks he plans to eliminate -- but the Tax Policy Center report indicates the plan would force the tax burden to shift toward lower and middle-class Americans.
"A revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed ... would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers," the report concludes. According to the study, the Romney tax cuts would produce a $360 billion revenue loss in 2015, and offsetting that would require a reduction of 65% of all available tax expenditures. Such popular tax breaks include deductions for mortgage interest and state income taxes, the exclusion from income of employer-paid health insurance and lower tax rates on capital gains.
"Such a reduction by itself would be unprecedented, and would require deep reductions in many popular tax benefits," the report said. And because most tax breaks go to the poor and middle class, "maintaining revenue neutrality mathematically necessitates a shift in the tax burden of at least $86 billion away from high-income taxpayers and onto lower- and middle-income taxpayers." The end result is that individuals who make less than $200,000 would actually have to pay $500 more, on average, in taxes -- a 1.2% decrease in after-tax income, the study found. Meanwhile, the after-tax income of individuals who make more than $1 million would increase by 4.1%.
The Romney campaign disputed the findings of the study, arguing that the analysis was flawed because it did not account for additional revenue that would result from a reduction in the corporate tax rate -- another part of Romney's plan. "Ignoring the growth effects of corporate tax reform discredits the Tax Policy Center immediately," a Romney campaign spokesperson said. "By not including the substantial growth effects of the corporate side [of] reforms, the entire study is based on flawed assumptions," the spokesperson added.
So a reduction in the corporate tax rate is somehow going to put hands into the poor? Does anybody expect Walmart to hand out pay raises to their employees if their taxes are reduced? This is another example of the flawed “trickle down” theory that Republicans have pushed for three decades and one of many reasons why Willard doesn’t belong in the White House.