Romney’s tax plan will raise taxes for the non-rich

The Brooking’s Institute released an analysis of Mitt Romney’s tax plan. Here’s two reports on it:

Kevin Drum:

The analysts at the Tax Policy Center provide a pretty good clue today. Romney himself won’t say anything about the credits and deductions he’d target, so they made the most progressive assumptions they possibly could about them by “starting at the top.” That is, they made a list of all the possible credits and deductions and then completely eliminated them for the highest income group. This would produce the largest possible increase for the wealthy. Then they worked their way down, and by the time they got to the bottom group they reduced the credits and deductions only enough to make the whole plan revenue neutral. This produced the smallest possible increase for the non-wealthy.

So: the biggest possible increase for the wealthy, the smallest possible increase for the less wealthy. For technical reasons, they could only model this down to $200,000, but that’s enough to show what Romney’s plan would do. You can see it in the chart on the right. When you combine the decrease in rates and the increase from credits and deductions, millionaires would get a tax cut of 4.1%. Everyone under $200,000 would get a tax increase of 1.2%.

And Romney, of course, will hide behind the fact that he himself hasn’t endorsed any particular basket of tax increases to make up for his rate cuts, so the Brookings analysis is just guesswork.

Still, it’s the most sympathetic analysis possible. Any other basket of credits and deductions would make things even better for the wealthy and even worse for the non-wealthy.

Boston Globe:

The report published Wednesday estimated households with incomes over $1 million would receive average tax cuts of $87,117 under Romney’s plan, while those earning $200,000 or less would pay higher taxes.

Brookings analysts concluded that Romney’s plan favors high earners “even when we bias our assumptions about which and whose tax expenditures are reduced to make the resulting tax system as progressive as possible.”

“For instance,” analysts said, “even when we assume that tax breaks — like the charitable deduction, mortgage interest deduction, and the exclusion for health insurance — are completely eliminated for higher-income households first, and only then reduced as necessary for other households to achieve overall revenue-neutrality, the net effect of the plan would be a tax cut for high-income households coupled with a tax increase for middle-income households.”

The Romney campaign dismissed the report as a liberal study. “President Obama continues to tout liberal studies calling for more tax hikes and more government spending,” Romney spokesman Ryan Williams said.

The analysis was conducted by three Brookings economists, including William G. Gale, an economic adviser to President George H. W. Bush, and Adam Looney, who served on Obama’s Council of Economic Advisers.

It’s a reporters job to make a story clear. A good reporter would add in the last bit that KD did to make it clear that Romney’s tax plan, the parts he has made explicit, guarantee that the rich will get tax cuts and the rest of us will pay higher rates–the only reason to include a quote from Romney’s spokesman is if they can show how the report is wrong by explicitly showing which tax breaks could be eliminated (in a revenue neutral way as Romney claims he wants) that do not raise the taxes that the non-rich pay.

1 Comment (+add yours?)

  1. Trackback: Paul Ryan for veep « Petunias

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