Republican presidential candidate Mitt Romney has released a new tax plan that proposes to cut income taxes for all income groups by 20%.
The Tax Policy Center, a self-identified non-partisan group, analyzed the proposal and found that the plan would raise after-tax income by 4.1% for those making more than $1,000,000 a year, Reuters reported. Meanwhile, those earning less than $200,000 a year would witness a 1.2% reduction in their after-tax income.
(source: The Atlantic)
This estimated cost to the middle class comes from the search for a source of the $5 trillion that would be needed to fund the tax cuts.
The analysts at the Tax Policy Center estimated that the government would have to eliminate roughly two-thirds of the tax breaks it offers each year, which total $1.1 trillion. Even the 20% reduction of the income tax would not make up for the loss of tax breaks such as the mortgage-interest break, the analysts found.
Romney has made no official statement about which tax benefits would be cut in order to fund these tax cuts, so the Tax Policy Center’s numbers are merely speculative.
President Barack Obama, campaigning in Ohio, spoke out against Romney’s proposed tax cuts. President Obama argued that, according to the Tax Policy Center’s analysis, the average family in America’s taxes would increase by $2,000.
“But here’s the thing,” Obama said of his GOP opponent, “he’s not asking you to contribute more to pay down the deficit, or to invest in our kids’ education. He’s asking you to pay more so that people like him can get a tax cut.”
Romney's campaign responded to the report by saying that the Tax Policy Center's analysis failed to account for spending cuts that Romney had proposed, as well as pointing to the stimulating effect that lower corporate taxes could have on the economy. Romney's Policy Director Lanhee Chen called the report "a biased study from a former Obama staffer that ignores critical parts of Governor Romney's tax reform program, which will help the middle class and promote faster economic growth." One of the three authors of the study worked in the White House during Obama's administration.
Romney's campaign countered the Tax Policy Center's study with one from the more conservative Tax Foundation, which says that a 10% cut to corporate taxes could lead to a 9% increase to average wages.
Weigh in: Is the think tank’s assessment of Romney’s tax policy fair and balanced, or could he fund the tax cuts without hurting middle-class citizens?
If their picture of his tax plan is correct, and the tax policy will benefit the highest income brackets at a cost to the middle class, how will this affect our economy, and what effect does it have on your opinion of the two candidates?
Share your thoughts in in the comments section below