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Chart showing one effect of Romney tsx cut proposal
Team Romney isn't refuting a damning new report evaluating the impact of his tax proposals by the Tax Policy Center of the Urban Institute and Brookings Institution. It's just saying the center can't be trusted because it's "liberal." Romney was singing a different tune last year when the TPC was giving some grief to the tax plans of another candidate for the GOP presidential nomination, Gov. Rick Perry. TPC got Romney praises then.

The center's new study—On the Distributional Effects of Base-Broadening Income Tax Reform—explores the kind of tax changes Mitt Romney says he would make: a 20 percent income tax cut across the board, lost revenue to be paid for by eliminating a boatload of popular deductions.

Best case result, according to the TPC: Americans making half a million to a million dollars a year would average a $17,000 tax cut. For middle-class families with children making less than $200,000 a year, the average tax would increase by $2041 a year. The rich, natch, would make out like bandits, millionaires getting an $87,000 tax cut, those making more getting even more out of the deal.

And that result comes from using a model that makes the tax code as progressive as possible. It could be a lot worse. States the report:

Offsetting the $360 billion in [annual] revenue losses necessitates a reduction of roughly 65 percent of available tax expenditures. Such a reduction by itself would be unprecedented, and would require deep reductions in many popular tax benefits ranging from the mortgage interest deduction, the exclusion for employer-provided health insurance, the deduction for charitable contributions, and benefits for low- and middle-income families and children like the [Earned Income Tax Credit] and child tax credit. [...]

The above estimates assume that all available tax expenditures for higher-income households are completely eliminated—tax expenditures that include deductions for charitable contributions, mortgage interest, state and local taxes, and exclusions from income of health insurance and other fringe benefits. To the degree any of these were even partially retained for high-income households, the net tax cuts for high-income households and tax increases for low- and middleincome households would be even larger.

Effects of lowering the capital gains tax and the corporate tax were not considered.

The authors of the study make clear that figuring exactly how the details of such a tax plan would play out in the real world is no easy matter. They present numerous caveats. Just how likely would it be, for instance, that all tax expenditures for deductions could be taken away first from top income earners, reducing some of the need to cut those expenditures for less affluent Americans? Unknown. But given elected Republicans' penchant for taking the income tax closer and closer to their wealthy patrons' flat-tax ideal, "not very likely" would be a good guess.

Bottom line: Implementation of the Romney across-the-board cuts would result in even worse disparity than the TPC study shows.

As Jed Lewison pointed out earlier today, the Obama administration lost no time telling Americans exactly what Romney's plans would do. Except, being presidential and all, he couldn't say "It's a screw job, folks." Sometimes decorum gets in the way of truth.


Lefty Coaster has a discussion here.

Originally posted to Meteor Blades on Wed Aug 01, 2012 at 12:13 PM PDT.

Also republished by Daily Kos.

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