Wealthy would cash in under Romney tax plan
Mitt Romney’s new tax plan would mean lower taxes for most Americans. But some would benefit more than others.
According to a new analysis from the Tax Policy Center, wealthy Americans would see their taxes fall precipitously under Mitt Romney’s new plan — which scraps the Alternative Minimum Tax and cuts marginal tax rates by 20%.
Assuming the Bush tax cuts are extended, the Romney plan would give the top 1% of earners an average tax cut of $150,000, a 7.8% reduction in their average federal tax rate, according to the Tax Policy Center.
Americans in the middle 20% of income-earners would get an average tax cut of $810, a 1.4% tax rate reduction.
Those making $1 million or more would receive an average tax cut of $250,000, an 8.1% tax rate reduction, while the average American would get $2,800, a 3.5% rate drop.
The plan would also add to the deficit — $480 billion in calendar year 2015 alone, according to the study.
For its part, the Romney campaign disputes any claim that his plan would add to the deficit. The cuts “will be fully paid for through a combination of economic growth, base broadening and spending restraint,” campaign spokeswoman Andrea Saul told CNNMoney on Wednesday.
But the campaign has not spelled out which tax cuts it wants to kill, making it difficult to score.
“Romney seems to be trying to walk a fine line between responsible fiscal policy and pandering to his base,” Howard Gleckman, a resident fellow at the Urban Institute, wrote in a blog post. “But by not identifying how he’d pay for his generous tax cuts, his tightrope is getting pretty wobbly.”
The campaign has also said the tax cuts will spur growth that will, in turn, create additional revenue for the federal government. The TPC analysis does not take that growth into account.
The updated plan reiterates other proposals that were first laid out in September, including provisions that would eliminate taxes on interest, dividends and capital gains for taxpayers who make less than $200,000.
It also calls for the elimination of the estate tax, and a reduction in the tax rate paid by corporations from 35% to 25%.
The candidate’s initial economic plan — released in September — was billed by the Romney campaign as “the most detailed plan for economic growth and job creation of any presidential candidate.”
But it would only “maintain current tax rates on personal income” as president before moving to a “fairer, flatter, simpler tax structure” in the future.
That plan fell flat with some influential conservatives, including the Wall Street Journal editorial board, which labeled the proposals “surprisingly timid and tactical.”
The Tax Foundation, a think tank that generally advocates for lower tax rates, said that Romney’s initial plan for the individual code “really takes no step toward fundamental reform.”