Mitt Romney has a tax plan that promises $5 trillion in tax cuts weighted towards the wealthy—which can only be paid for by raising taxes on middle-class families with kids by more than $2,000. At the first presidential debate, Romney tried to walk away from his plan, making the impossible promise that it would neither add to the deficit nor raise taxes on the middle class. Unsurprisingly, he failed to offer any details on how he’d accomplish this.
Noting that Romney is “long on promises and short on details,” Bloomberg News had tax experts delve into the specifics of one option Romney proposed to find out how it would impact American families. Here’s what they found:
[Romney’s] tax plan, however, would upend financial planning for millions of middle-class households, denying them thousands of dollars in annual deductions. Earlier this week, after months of refusing to specify which tax breaks he would curtail, Romney said taxpayers might be able to take a total of no more than $17,000 in deductions each year.
That won’t bring in enough revenue to make up for almost $5 trillion the government will lose over 10 years once tax rates are reduced by 20 percent as Romney has proposed, according to economist William Gale of the Brookings Institution in Washington.
“It doesn’t come close to paying for the $5 trillion,” said Gale, who co-authored a study of Romney’s tax plan for the non-partisan Tax Policy Center in Washington.
At least 3.7 million U.S. taxpayers last year reported deductions of $25,000 or more. About 10 million others wrote off $15,000 to $25,000. Romney says their taxes wouldn’t go up, and in fact would decline, under his 20 percent across-the-board tax rate cut.
In looking at his $17,000 deduction plan, one tax expert noted, “The reason you cut rates and broaden the tax base is to simplify the tax code ... if instead you just put a cap on, you’ve not simplified it and you’ve just added another layer of complexity.”