Obama for America National Policy Director James Kvaal breaks down a new report from the nonpartisan Tax Policy Center, which finds that Mitt Romney’s $5 trillion tax plan tilted towards the wealthy would shift the tax burden to middle-class families:
Mitt Romney has proposed a $5 trillion tax plan that provides large tax cuts to the wealthiest Americans. At times, he has claimed that he will pay for his plan by closing tax deductions and other tax benefits, but refuses to say which ones. Today, an independent analysis showed that such a plan would require raising taxes by an average of more than $2,000 a year on middle-class families with children to pay for his massive tax cuts for the wealthiest Americans. As a result, it would raise taxes on millions of middle-class families so he can cut taxes for the most fortunate households. ...
According to Bill Gale, Adam Looney, and Samuel Brown of the nonpartisan Tax Policy Center, a project of the Brookings Institution and the Urban Institute, “any revenue neutral individual income tax change that incorporates the features Governor Romney has proposed would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers.” They conclude that:
Even after eliminating all tax preferences (except those for savings and investment) for high-income families, Romney’s plan would still cut taxes for households earning more than $200,000 by $86 billion a year. Therefore, Romney would have to raise taxes on the middle class by the same amount to pay for his plan, cutting middle-class tax preferences by more than half (58 percent).
The Romney plan would raise taxes by $2,041 a year for the average middle-class family with children and an income below $200,000 a year. Among all taxpayers earning less than $200,000 a year—including those without children—it would raise taxes by an average of $539 a year.
The Romney plan would cut taxes for the highest-income households, providing a $87,000 tax cut for those earning more than $1 million a year and a $247,000 tax cut for those in the top 0.1% of income earners, or those earning more than about $3 million a year.
Here’s a look at exactly how Romney’s plan would affect middle-class families:
$2,500 tax increase for a married couple with two children and an income of $100,000. They live in Virginia and pay $6,500 in state income and property taxes, pay $1,700 a month on their mortgage, donate $1,000 a year to charity, and receive health benefits from work worth $15,000 a year. Even though this family would receive a sizable tax cut from the Romney plan’s rate reductions, it would be dwarfed by the cuts to their Child Tax Credit and deductions for mortgage interest, state and local taxes, and charitable giving, and the taxes they would have to pay on their employer-provided health insurance.
$2,200 tax increase for a single mother with one child earning $20,000 a year. She would not benefit at all from reduced tax rates, and would see her Child Tax Credit and Earned Income Tax Credit cut by more than half.
$500 tax increase for a married couple with no children and an income of $45,000. They rent their home and claim the standard deduction rather than itemizing. They are covered by an employer health plan worth $15,000. Even though they claim no other tax benefits, the new taxes they would have to pay on a portion of the value of their health insurance would still be larger than what they would receive from the Romney plan’s rate cuts.
$259,000 tax cut for a couple earning $10 million a year. A married couple with income of $10 million that claims $1.5 million of itemized deductions would get a net tax cut of $259,000.
In contrast, President Obama believes in supporting and strengthening the economic security of middle-class families. As Kvaal notes:
President Obama has proposed a responsible plan that will prevent any family earning less than $250,000 a year from facing a tax increase, while reducing the deficit by more than $4 trillion over the next decade. It includes $2.50 in spending cuts for every $1 in revenue increases. And it asks the highest earners to pay their fair share to prevent devastating cuts in investments in the middle class, like education, energy, Social Security, and Medicare. President Obama has already cut taxes for every working family, enacting tax cuts worth $3,600 to a typical family over his first term, and he will continue to protect middle-class families from higher taxes.