Lower taxes on the rich and higher taxes on the middle class is how a nonpartisan analysis summed up Mitt Romney's tax plan. The study cuts through the magical thinking surrounding the presumptive Republican presidential nominee's promise to lower taxes without adding to the budget deficit. To fulfill Romney's promise would require the elimination of a host of tax credits and deductions that middle-income Americans rely upon but that Romney won't specify. If he wants to argue with the numbers, rather than shooting at the messenger, he will have to demonstrate how the numbers are wrong and fill in the blanks in his plan.
According to the Tax Policy Center analysis, Romney's plan to extend the Bush tax cuts for everyone, lower marginal tax rates by 20 percent, eliminate the alternative minimum tax and estate taxes and get rid of taxes on investment income for most taxpayers, while not adding to the deficit, would be a boon for top earners alone. People making $1 million or more would see an average tax cut of $87,000. But people making under $200,000 would see their taxes go up. Those earning between $75,000 and $100,000 per year would see their taxes increase $884.
How does this happen? Because in order to offset the $360 billion revenue loss from tax cuts, big-ticket tax breaks would have to close, including the mortgage interest deduction, the tax exclusion for employer-provided health coverage and the deduction for charitable giving, among others. And since the value of those tax breaks are far less for high-income taxpayers than the value of the Romney tax cuts, middle- and lower-income taxpayers would have to make up the difference. As a result, the tax burden would shift by $86 billion from high-income taxpayers to middle- and lower-income taxpayers, the center found.
The numbers speak volumes about the Romney campaign's priorities. While President Barack Obama is proposing that taxes rise on the wealthiest Americans by letting the Bush tax cuts lapse only for those with incomes of $250,000 or more, Romney would flip that formula and give further breaks to the nation's millionaires, people who are already paying the lowest effective tax rate in 60 years.
The Romney camp attacked the messenger as politically biased since one of the three authors had worked in the Obama White House. But previously the Romney campaign had promoted the center's work as providing an "objective, third-party analysis," and the center is directed by a former economic adviser to Republican President George W. Bush.
Romney's campaign also said the authors failed to incorporate the 5 percent nondefense domestic spending cuts Romney calls for that would offset some revenue losses from tax cuts. But that only accounts for $145 billion, and the campaign won't say where the other $215 billion would come from.
Too often candidates get away with fanciful claims that they can cut taxes without reducing defense spending or worsening the deficit. Romney's attempt was properly called out by a group of number-crunchers. If he has a dispute with the results, he needs to provide specifics on just how he will provide massive tax relief to those at the top without adding to the tax burdens of average people.