The features of Mitt Romney’s tax plan that would cut rates by 20% across the board are these. Mr. Romney says the plan would not increase the deficit. It will. Mr. Romney says his plan would not be a tax cut for wealthy people. It is. Mr. Romney says everyone has to trust him on this because he will not release details. We don’t.
The independent and non-partisan Tax Policy Center has previously weighed in on Mr. Romney’s plans and concluded they would require a tax hike on low and middle income tax payers to meet the goal of being revenue neutral. Now that Mr. Romney has set out a number, limiting itemized deductions to $25,000 the TPC has looked again at the plan. It’s conclusions have not changed.
Mr. Williams also noted that the new estimates show that capping deductions alone is not enough to pay for the full panoply of tax policies that Mr. Romney is promoting. “These new estimates suggest that Romney will need to do much more than capping itemized deductions to pay for the roughly $5 trillion in rate cuts and other tax benefits he has proposed,” he wrote.
Since the Romney camp lives in denial, they have denied these conclusions, simply because the conclusions don’t jive with what they want reality to be.
The Romney campaign sees the new
study as criticism that its math doesn’t add up. Among other things, the Romney
campaign says in its blog post that the study leaves out the fact that a
lot of other tax breaks could still be pared or trimmed. The campaign also
objects to what it sees as an implication that that capping deductions could
help make up revenue for another key part of its overhaul plan – reducing the
top corporate tax rate to 25% from 35%. Tax
There is good news here. Using the deductions cap as a mechanism to implement tax policy would result in more progressive system.
A $50,000 cap would “virtually exempt” people in the bottom 80% of income from higher taxes, he wrote. A $17,000 limit on itemized deductions would mean that 83% of the tax increase in 2015 would fall on the top fifth of taxpayers, and 40% on the top 1%, he said.
What does that mean? It means the plan would never be implemented without massive tax decreases to the wealthy. No cap on deductions unless tax rates for the highest income earners are cut substantially.