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Lower taxes on the rich and higher taxes on the middle class is how a nonpartisan analysis summed up Mitt Romney's tax plan.
According to the Tax Policy Center analysis, Romney's plan to extend the Bush tax cuts for everyone, lower marginal tax rates by 20 percent, eliminate the alternative minimum tax and estate taxes and get rid of taxes on investment income for most taxpayers, while not adding to the deficit, would be a boon for top earners alone. People making $1 million or more would see an average tax cut of $87,000. But people making under $200,000 would see their taxes go up. Those earning between $75,000 and $100,000 per year would see their taxes increase $884.
How does this happen? Because in order to offset the $360 billion revenue loss from tax cuts, big-ticket tax breaks would have to close, including the mortgage interest deduction, the tax exclusion for employer-provided health coverage and the deduction for charitable giving, among others. And since the value of those tax breaks are far less for high-income taxpayers than the value of the Romney tax cuts, middle- and lower-income taxpayers would have to make up the difference. As a result, the tax burden would shift by $86 billion from high-income taxpayers to middle- and lower-income taxpayers, the center found.
The numbers speak volumes about the Romney campaign's priorities. While President Barack Obama is proposing that taxes rise on the wealthiest Americans by letting the Bush tax cuts lapse only for those with incomes of $250,000 or more, Romney would flip that formula and give further breaks to the nation's millionaires, people who are already paying the lowest effective tax rate in 60 years.
Our major conclusion is that a revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed – including reducing marginal tax rates substantially, eliminating the individual alternative minimum tax (AMT) and maintaining all tax breaks for saving and investment – would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers.
Obama or Romney?