Wed Aug 1, 2012, 06:41 PM
Bill USA (4,753 posts)
Study: Romney Plan Increases Taxes On 95% Of Americans
Mitt Romney has been on the defensive today over a new study that found his tax plan would most likely increase taxes on the middle class in order to pay for a hefty tax cut for the wealthiest Americans. The study (pdf) by the nonpartisan Brookings Institution and Tax Policy Center scrutinizes Romney's plan to pay for a variety of tax cuts by closing tax loopholes. It concludes that under the most progressive approach possible, Romney's plan would give an $87,000 tax cut to people making more than $1 million a year but require 95 percent of Americans to pay more taxes—on average, $500 more per year.
"He's asking you to pay more so that people like him can get a big tax cut," Obama said from the campaign trail in Ohio today.
Romney has pushed back against the study, claiming that the Tax Policy Center is a "liberal" group. But as ThinkProgress points out, Romney praised the Tax Policy Center's analysis of Gov. Rick Perry's tax plan during the GOP primaries, calling it an "objective, third-party analysis."
Here's TPC's chart of who wins and loses under the Romney tax plan:
New Analysis Shows Romney Tax Plan Would Raise Taxes On Middle Class Families By More Than $2,000
On the campaign trail, Mitt Romney has been promising that he will cut taxes “across the board,” while also instituting tax reform that will not add to the nation’s deficit. But a new report from the Tax Policy Center at the Brookings Institution shows that this is much easier said than done.
In fact, if Romney were to actually implement his plan to reduce tax rates by 20 percent while eliminating tax deductions in order to pay for it, taxpayers with more than $200,000 would certainly see a tax cut. But everyone else — 95 percent of Americans — will see their taxes increase. And this result occurs even assuming that Romney would eliminate tax deductions so as to make the tax as progressive as possible:
To estimate how average household tax burdens among different income groups would change as a result of this shift, we assume that the available tax expenditures are curtailed “from the top down” in order to make the tax plan as progressive as possible…Even after eliminating all available tax expenditures for households earning more than $200,000, this group still faces a net tax break. Americans making over $1 million would see an increase in after-tax income of 4.1 percent (an $87,000 tax cut), those making between $500,000 and $1 million would see an increase of 3.2 percent (a $17,000 tax cut), and those making between $200,000 and $500,000 would see an increase of 0.8 percent (a $1,800 tax cut).
Here’s how the plan would affect the average taxpayer in each income group. As the column labeled “revenue neutral” shows, all taxpayers making less than $200,000 would see their taxes go up by hundreds, if not thousands, of dollars. In particular, families with children would see their taxes go up by $2,041, on average:
Again, this analysis assumes that deductions are eliminated in a way that would make the tax code as progressive as possible, so its likely that, in practice, Romney’s plan would look even worse. To this point, Romney has refused to specify which deductions he would limit or eliminate.
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