Republican presidential candidate Mitt Romney, left, campaigns with… (Charles Dharapak / Associated…)
Mitt Romney’s proposed tax plan would slash federal revenue and deliver a substantial tax cut to the wealthiest Americans, according to a new analysis by the nonpartisan Tax Policy Center.
Romney, the former Massachusetts governor and leading contender for the GOP presidential nomination, proposes to make permanent the George W. Bush-era tax cuts; slice the corporate income tax rate from 35% to 25%; repeal the federal estate tax and do away with taxes on long-term capital gains, dividends and interest income for households making less than $200,000; among other things.
Compared with current law, under which the Bush tax cuts – and some additional cuts passed under President Obama – would expire at the end of this year, Romney’s plan would result in a $600-billion reduction in federal revenue in 2015. If those cuts don’t expire, Romney’s plan would reduce revenue by about $180 billion.
Howard Gleckman, a resident fellow at the Tax Policy Center, wrote in an analysis of the center’s findings that “a Romney administration’s revenue agenda would look a lot like President George W. Bush’s, just more so.”
Assuming the Bush tax cuts did expire, Romney’s plan would deliver an average tax cut of almost $300,000 to households making more than $1 million, according to Gleckman. Taxpayers who make more than $1 million currently pay about 20% of all federal taxes, Gleckman said. Under Romney’s plan, they’d get more than 28% of the cuts. Those making $50,000 to $75,000 would have their taxes cut about $1,800.
When compared with existing tax policy – that is, assuming Congress and Obama agree to extend existing tax cuts – Romney’s plan would still benefit the rich, but would result in a tax hike for some poor and middle-class taxpayers.
One in five households making $10,000 to $20,000 would get hit with an extra $1,000, mostly because Romney would return to pre-Obama levels the value of refundable child and earned income credits. One in six households making $40,000 to $50,000 would see their taxes increase nearly $800, while one in three of those households would get a $400 break. Meanwhile, taxes would go down, on average, about $150,000 for those making more than $1 million.
Romney spokeswoman Andrea Saul refuted the center's assessment of the plan.
“Mitt Romney has not proposed raising taxes," Saul said in an email statement. "In fact, he laid out a blueprint for governing that includes dramatic spending cuts to reduce the deficit and pro-growth tax policies that permanently extend the Bush tax cuts, dramatically cut the corporate tax rate to create jobs, and deliver real tax relief to middle-income taxpayers. President Obama has raised taxes 19 times, stunting our economic growth and leading us further down the path toward a European-style entitlement society.”