Mitt Romney has detailed a specific tax plan that provides tax cuts weighted towards millionaires and billionaires. Altogether, these tax cuts will cost about $5 trillion including interest. Here’s the math:The proof that Romney's plan is going to ask the middle class to pay more so that the wealthy can pay less is that Romney refuses to specify what deductions and loopholes he plans to cut. If it were possible to do what he claims he wants to do, which is to reduce rates and eliminate deductions so that the plan does not increase the deficit, and does not take more from the middle class, the Romney campaign would explain how they think they can do it. If they won't explain it, the only logical conclusion is that they can't do it.
TOTAL: $5 trillion in tax cuts including interest
- Lower tax rates by 20% = $2.5 trillion
- Eliminating the Alternative Minimum Tax = $700 billion
- Repeal of high-income payroll tax = $300 billion
- Repeal the estate tax = $150 billion
- Tax cut for corporations = $1.1 trillion
That math is clear. But when it comes to paying for these tax cuts, Romney hasn’t specified a single loophole he’d close and he’s said that taking steps that would require the wealthy to pay more—like raising their taxes on capital gains—are off the table. But even if he eliminated all other tax benefits for high-income taxpayers and enough corporate tax loopholes to pay for his plan, he’d still need to increase middle class taxes by $1 trillion to pay for his plan.
TOTAL: $4 trillion
- Ending all tax benefits for the wealthy = $1.7 trillion
- Eliminate corporate tax benefits to offset corporate tax cut = $1.1 trillion
- Eliminate enough middle class tax benefits to pay for middle class tax cut = $1 trillion
That leaves $1 trillion that Romney must find either by increasing middle class taxes or increasing the deficit.
Even the studies that Romney has cited to claim his plan adds up still show he would need to raise middle class taxes. In fact, Harvard economist Martin Feldstein and Princeton economist Harvey Rosen both concede that paying for Romney’s tax cuts would require large tax increases on families making between $100,000 and $200,000.
Here’s the denominator: Romney indeed has a problem. No matter how Romney sets up his tax equation, it always adds up to a tax hike on the middle class.
In addition, people might wonder what is the point of reducing tax rates and at the same time eliminating tax breaks, if all you're going to accomplish by doing that is taking with one hand what you are giving back with the other. It's hard to see how that kind of tax reform amounts to a plan to improve the economy.
People might also question the likelihood of eliminating such popular tax breaks as the home mortgage deduction or the deduction for charitable contributions. Politicians have talked about eliminating those deductions before, but it never seems to happen. That's because the housing industry and the mortgage lending industry are not about to sit by quietly while Congress cuts that deduction, which is pretty popular among homeowners also. Expect the same reaction from churches, universities, and every other charity in America if Congress tries to eliminate the deduction for charitable contributions. It's hard to think of a tax deduction or loophole that doesn't have a powerful lobby behind it. That's how these things get into the code in the first place.
Plainly, there is no way to work the Romney tax plan that will not skew the benefits toward the wealthiest taxpayers, while the middle class gets screwed. But why would anybody be surprised by that?