GO
Loading...

Romney Tax Plan Helps Rich the Most: Tax Group

Reuters
Wednesday, 1 Aug 2012 | 1:37 PM ET
Mitt Romney
Getty Images
Mitt Romney

Republican U.S. presidential challenger Mitt Romney's proposal to slash individual income taxes by 20 percent across-the-board would primarily boost the income of the wealthiest taxpayers, according to a nonpartisan analysis released on Wednesday.

The report by the centrist Tax Policy Center found that Romney's tax cuts would boost after-tax income by an average of 4.1 percent for those earning more than $1 million a year, while reducing by an average of 1.2 percent the after-tax income of individuals earning less than $200,000.

Tax policy and how to tame the U.S. government's budget deficit, topping $1 trillion in recent years, is a major point of contrast in the presidential race, in which Romney will face President Barack Obama on November 6.

Romney, a multi-millionaire who made his fortune at private equity firm Bain Capital, has not spelled out how he would lower marginal tax rates. But he has said broadly he would cut some tax benefits for the wealthy.

Because the value of the 20 percent tax cut for richer Americans would exceed the gains they get from popular tax breaks that Romney would chop, they would see the greatest income gain from Romney's possible changes, the study said.

"We add up how much people get from the tax cuts and then add up how much can be potentially be raised," from ending tax breaks, said Adam Looney, an economist and one of the study's authors.

About two-thirds of the $1.1 trillion in revenues that the government foregoes annually because of tax breaks would have to be curbed to fund Romney's tax cut, the analysts said.

These tax breaks include popular ones such as the mortgage interest deduction, the break for employer-provided health insurance, and credits for low- and middle-income families.

The analysis assumed elimination of tax breaks would start with the wealthy as Romney has suggested, and it assumed some revenue growth from lower tax rates, a hallmark of Republican tax policy.

Obama has blasted Romney's tax plan for disproportionately benefiting the wealthy.

The tax policy debate is expected to intensify at the end of 2012, with the expiration of lower tax rates for all Americans enacted under Republican President George W. Bush.

The Democratic-led Senate last week passed legislation extending most of those tax rates - but not for households earning more than $250,000 a year.

The Republican-led House of Representatives will likely pass their plan to extend the current rates sometime this week.

The dispute is not likely to be resolved until after the elections.

Romney spokeswoman Amanda Henneberg said she could not respond to the center's report without reading it first.

Romney's tax proposal also includes cutting some taxes on investment income and eliminating taxes on estates passed on to heirs.

Featured

  • A reporter and editor, Robert Frank is a leading authority on the American wealthy for CNBC.