Flash: Mitt Romney’s tax proposal favors the rich
The experts at the nonprofit Tax Policy Center have placed Mitt Romney’s tax reform plan under the electron microscope, and their perhaps unsurprising conclusion is that it would “provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers.”
The analysts -- Bill Gale, a longtime Brookings Institution fellow, and Adam Looney, a former economist for the Fed and the Council of Economic Advisors in the Obama White House -- make an important broader point: Any time you refashion the tax code to hew to principles favored by conservatives, you’re going to push tax breaks toward the wealthy.
Those principles are lowering marginal rates, eliminating the alternative minimum tax (ATM), maintaining “revenue neutrality” and eliminating the most popular tax breaks such as the mortgage interest and health insurance deductions. These are, by the way, also the principles underlying the Bowles-Simpson deficit-cutting plan that is so inexplicably admired by Washington insiders.
Gale and Looney find that their conclusion holds true even if you eliminate the tax breaks for the wealthy and even if there’s strong economic growth.
They write: “It is not possible to design a revenue-neutral plan that does not reduce average tax burdens and the share of taxes paid by high-income taxpayers under the conditions described...even when we try to make the plan as progressive as possible.”
The tax break in Romney’s plan, they say, comes to an average $87,000 for taxpayers earning more than $1 million and $1,800 for those earning between $200,000 and $500,000. For households earning less than $200,000, the average tax increase is $500.
Gale and Looney acknowledge that their analysis is incomplete, for the simple reason that Romney is keeping many details of his plan secret. But the problem raised by what is known about the plan, they argue, is chiefly with Romney’s insistence that reform be “revenue neutral” -- that is, not decrease or increase the amount flowing to the federal government. That mandate means cutting tax deductions so broadly that the change hits the middle class hard.
Think about that the next time you hear a tax reformer talk about “broadening the tax base.” It means he’s coming for you.
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