A new independent analysis (pdf) of Mitt Romney’s tax plan should, in theory, dramatically change the nature of the election-year debate over tax policy. In short, Romney’s proposal is built around a middle-class tax hike, the proceeds of which would go to give wealthy “job creators” a very generous tax cut.
Mitt Romney’s plan to overhaul the tax code would produce cuts for the richest 5 percent of Americans – and bigger bills for everybody else, according to an independent analysis set for release Wednesday.
The study was conducted by researchers at the Brookings Institution and the nonpartisan Tax Policy Center, who seem to bend over backward to be fair to the Republican presidential candidate. To cover the cost of his plan – which would reduce tax rates by 20 percent, repeal the estate tax and eliminate taxes on investment income for middle-class taxpayers – the researchers assume that Romney would go after breaks for the richest taxpayers first.
They even look at what would happen if Republicans’ dreams for tax reform came true and the proposal generated significant revenue through economic growth.
This isn’t a hack-job published using worst-case scenarios; it’s the opposite. The Brookings Institution and Tax Policy Center made every assumption in Romney’s favor, giving him the benefit of the doubt as much as possible.
I put together the above chart by income group – on the far left, we see those in the bottom 20%, then those in the next highest quintile, and so on. Notice that everyone’s tax burden go up under Romney’s vision, except those in the top 5%, who see get a generous windfall.
And here’s the kicker: I had to leave off the top 0.1% of earners, because it made the chart unreadable. If you’re in the bottom 80%, your tax increase under Romney would range from $128 to $1,880, but if you’re in the top 0.1%, your tax break would be worth nearly a quarter of a million dollars.
President Obama will be in Mansfield, Ohio, today, and according to remarks prepared for delivery, he’s going to take full advantage of the new revelations:
“[T]he centerpiece of my opponent’s entire economic plan is a new, $5 trillion tax cut. A lot of this tax cut would go to the wealthiest 1% of all households. Folks making more than $3 million a year – the top one-tenth of one percent – would get a tax cut worth almost a quarter of a million dollars. A quarter of a million dollars.
“But it gets worse. Under my opponent’s plan, guess who gets the bill for these $250,000 tax cuts? You do. And you don’t have to take my word for it.
“Just today, an independent, non-partisan organization ran all the numbers. And they found that if Governor Romney wants to keep his word and pay for his plan, he’d have to cut tax breaks that middle-class families depend on to pay for your home, or your health care, or send your kids to college. That means the average middle-class family with children would be hit with a tax increase of more than $2,000.
“But here’s the thing – he’s not asking you to contribute more to pay down the deficit, or to invest in our kids’ education. He’s asking you to pay more so that people like him can get a tax cut.”