Wealthiest Voters May Like Romney Even More Now
Wealthy voters liked Romney before: they may like him even more now.
Romney’s choice of Paul Ryan as his running mate has focused the national spotlight on the role of the wealthy in the economy. Ryan, even more than Romney, believes that successful job creators and smart risk-takers should be encouraged rather than taxed.
Obama believes the wealthy have been rewarded enough and should pay more of their fair share.
It is this fundamental difference – between the “job-creator” view and the “fair-sharers” – that lies at the heart of the way each of these three politicians approaches taxes for the top earners. It is also the difference that has been, and will be, debated constantly by pundits.
But what are their actual plans for taxing the wealthy?
To get beyond the hyperbole and into the numbers, we searched out the details of tax plans put forward by Romney, Ryan and Obama. Each of the plans has been crunched by the non-partisan Tax Policy Center. Here is how each plan would effect high-earners.
Each of these assume that the Bush tax cuts are extended for all taxpayers and are estimates for 2015.
Paul Ryan really has two plans: his 2010 "Roadmap for America’s Future" and the budget he put forward in the House. Both plans call for a top tax rate of 25 percent, down from the current 35 percent.
Under the Roadmap, people making between $200,000 and $500,000 annually would get an average tax cut of $5,514 in 2015. People making $500,000 to $1 million would get an average tax cut of $50,859. People making $1 million or more would see an average tax reduction of $501,861.
Under Ryan’s House budget plan, taxpayers making $200,000 to $500,000 would see an average tax reduction of $11,089. Those making $500,000 to $1 million would see a drop of $47,040 and those making $1 million or more would see their taxes go down an average of $264,970.
The main difference between Ryan's two plans is how they treat capital gains and dividend income. His House plan preserves taxes on capital gains and dividends, while his “Roadmap” eliminates taxes on many forms of investment income.
In sum, Ryan’s plans are the most favorable toward the top earners compared to Romney and Obama – especially for those who make their money from investments.
Mitt Romney has yet to lay out some important specifics in his plan – like which deductions he would eliminate for the wealthy to make his tax cuts revenue-neutral. For now, however, we know that his plan would reduce taxes for the wealthy, though not quite as much as Ryan's.
Romney would reduce the top tax rate to 28 percent but preserve capital-gains and dividend taxes for those making more than $250,000. He would also eliminate the estate tax.
The bottom line: For those making $200,000 to $500,000, taxes would fall an average of $15,790 in 2015. Those making $500,000 to $1 million get a tax cut averaging $50,520, while those making $1 million or more would see taxes go down $250,535.
President Obama’s plan hits the wealthy the hardest, with ordinary-income rates for top earners increasing to 39.6 percent. His plan would see the average tax paid by those making $200,000 to $500,000 go up $6,503. Taxes for those making $500,000 to $1 million would jump by $50,520, while taxes for those making $1 million or more would go up by an average of $250,535.
Put another way, some people making $1 million or more would see a difference of $750,000 in their taxes between the Obama plan and the Ryan “Roadmap.” It would be a swing of more than a $10,000 for people making $200,000 to $500,000 and more than $100,000 for people making between $500,000 and $1 million.
Of course, Romney has said he will not adopt Ryan’s budget plans. And the net effect of these tax plans varies greatly by taxpayer, depending on their reliance on investment income.
Yet for now, these three candidates offer three different visions of the proper tax contributions of the highest earners.
“When you compare the Obama plan and those proposed by Ryan and Romney, you see that the president would raise taxes on the wealthy, while both Romney and Ryan would reduce those taxes primarily by lowering the top tax rate and limiting the taxes on investment income,” said Roberton Williams, senior fellow at the Tax Policy Center.
-By CNBC's Robert Frank
Follow Robert Frank on Twitter: @robtfrank