WASHINGTON — Mitt Romney’s tax plan would cut taxes for fewer than half of U.S. households, with the wealthy getting most of the benefits, according to an independent analysis released Thursday.
Some taxpayers at the lower end of the scale — those who make less than $40,000 a year — could pay more taxes under Romney’s plan.
Under the presumption that the Bush-era tax reductions are extended — as Romney has proposed — nearly all Americans who make more than $1 million would get tax cuts that average $150,000, the review by the nonpartisan Tax Policy Center found.
The center found that if the Bush tax reductions that President Barack Obama extended were to expire, the Romney plan would cut taxes for about three-fourths of taxpayers by an average of more than $4,700. Those who make more than $1 million — who pay 20 percent of all federal taxes — would get breaks of nearly $300,000, or 28 percent of Romney’s tax reductions.
In contrast, with the Bush tax cuts extended, taxes would go up for an average of more than $900 for about 13 percent of taxpayers, while 42 percent would get tax reductions averaging nearly $2,900.
The analysis is part of a series of examinations of the presidential candidates’ tax proposals by the center, a joint project of the Brookings Institution and the Urban Institute in Washington.
With Romney hoping to turn a narrow win this week in the Iowa caucuses into securing the Republican presidential nomination and turning his sights on Obama, his tax proposal reflects a sharp contrast with the president, who wants to raise taxes on the wealthiest Americans.
Still, while Romney’s plan proposes “huge tax cuts, they are more modest than those of his (Republican) rivals,” wrote Howard Gleckman, the editor of the Tax Policy Center’s blog, TaxVox.
The plan also would “add hundreds of billions of dollars to the deficit,” Gleckman said.
If the Bush tax cuts remain in place as Romney advocates, Gleckman wrote, Romney would add about $180 billion to the deficit in 2015.
Still, Gleckman labeled the plan a “fairly mainstream Republican offering,” noting that it calls for “no major tax reform.
“Romney says he’d rewrite the entire tax code — someday. But he doesn’t say how or when. Until he does, a Romney administration’s revenue agenda would look a lot like President George W. Bush’s, just more so.”
Romney’s campaign took issue with the analysis, saying Romney “has not proposed raising taxes.
“In fact, he laid out a blueprint for governing that includes dramatic spending cuts to reduce the deficit and pro-growth tax policies that permanently extend the Bush tax cuts, dramatically cut the corporate tax rate to create jobs and deliver real tax relief to middle-income taxpayers,” spokeswoman Andrea Saul said. “President Obama has raised taxes 19 times, stunting our economic growth and leading us further down the path toward a European-style entitlement society.”
Romney would make capital gains, dividends and interest income tax-free for those who earn less than $200,000, and he would repeal the estate tax, which affects only the very wealthy.
He would also cut the corporate tax rate from 35 percent to 25 percent, make a research tax credit permanent and give multinationals a temporary tax holiday for overseas profits they bring back to the U.S.