Romney's deduction caps don't pay for tax cuts: study

WASHINGTON Wed Oct 17, 2012 7:01pm EDT

U.S. Republican presidential nominee and former Massachusetts Governor Mitt Romney boards his campaign plane in Norfolk, Virginia, October 17, 2012. REUTERS/Jim Young

U.S. Republican presidential nominee and former Massachusetts Governor Mitt Romney boards his campaign plane in Norfolk, Virginia, October 17, 2012.

Credit: Reuters/Jim Young

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WASHINGTON (Reuters) - Mitt Romney's proposed cap on itemizing tax deductions could not on its own raise enough new government tax revenue to compensate for revenues lost by the Republican presidential candidate's plan to slash income tax rates, a think tank said on Wednesday.

The Tax Policy Center, a nonpartisan group that has weighed in on other Romney proposals, said his deductions cap could raise up to $1.7 trillion over 10 years. The center said earlier this year Romney's 20-percent tax rate cut would cost $4.8 trillion.

The former Massachusetts governor has argued that his plan will not cost $4.8 trillion. At a debate on Tuesday with Democratic President Barack Obama, Romney reiterated that he would pay for his tax cut proposal by capping tax deductions by a set dollar amount. Taxpayers could choose their deductions under the cap, such as the home mortgage interest and charitable donation write-offs, among others, he said.

"I'm going to bring rates down across the board for everybody, but I'm going to limit deductions and exemptions and credits, particularly for people at the high end," Romney said at the debate in Hempstead, New York.

The Tax Policy Center acknowledged its latest estimates were based on an incomplete picture of Romney's tax plan.

"The Tax Policy Center has again inserted their own assumptions in order to reach a biased conclusion," a Romney campaign spokeswoman said on Wednesday.

The Romney campaign had previously criticized the Tax Policy Center's estimates, saying they did not account for economic growth that can pay for tax cuts and that the center excluded some tax breaks in their studies.

The campaign has said the limit on itemized deductions would be only part of its plan to fund the rate cut. For instance, it would also revamp the tax treatment of healthcare, which now comes in the form of an exclusion when health insurance is workplace-based.

Romney has shifted the dollar amount taxpayers might be able to deduct. "I'll pick a number - $25,000 of deductions and credits, and you can decide which ones to use," he said.

Romney earlier this month floated a cap on deductions set at $17,000. His campaign later said that proposal is one of a range of options. Romney has also said $50,000 could serve as the cap.

The higher the cap, the less money Romney's tax plan could raise to offset tax rate cuts, the center's estimates show.

A cap of $17,000 would raise $1.7 trillion over 10 years while the $50,000 cap would raise only $760 billion. If Romney eliminated all itemized deductions, his plan could raise $2 trillion over 10 years, the center has estimated.

Obama has called for a cap on itemized deductions of 28 percent of adjusted gross income for individuals earning more than $200,000 a year and families earning more than $250,000.

(Reporting by Patrick Temple-West and Kim Dixon; Editing by Kevin Drawbaugh)

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Comments (8)
flashrooster wrote:
No kiddin’. But Romney said… fill in the blank with your favorite turd. It doesn’t matter. Romney could say we’re mining gold on the moon right now that will pay for the tax cuts, and the Republican sheep would believe it. Because with them it’s not about truth or fiction. It’s about moving the rightwing agenda forward, and the primary way they do that is to support Republicans. So you can prove them wrong all day every day but it won’t change their position.

If Romney is elected what we know is coming, because we’ve already seen this, is tax cuts mostly for the rich, a sharp increase in deficit spending, and then the Republicans will say we HAVE to cut spending because it’s an emergency, and so they’ll go about cutting all those programs that the poor and Middle Class depend on. That’s their game plan. People need to remember, Romney stated that he wouldn’t take a deal offering $10 in spending cuts for every $1 dollar in tax increases. You can’t tax cut your way to a balanced budget. That’s just lunacy. And after the deficits rise to dangerous levels and the GOP will insist on emergency cuts, Democrats will cry foul claiming the Republicans said that the tax cuts will lower the deficit, not raise it, but the Republicans won’t be listening. They’ll just keep telling the Americans people, hey, we’re in serious trouble unless we make drastic cuts. They’ll be right and the American people will have to go along with it, even though the cuts will make hard times even harder. But here’s the deal. They won’t be hard times for the rich. They’ll just keep getting richer.

Oct 17, 2012 8:16pm EDT  --  Report as abuse
TimoB wrote:
Yep, deficits don’t matter when republicans are president. But OMG the country is going to implode with deficits when a democrat is president!

Oct 17, 2012 8:25pm EDT  --  Report as abuse
Vis_Viva wrote:
Would ya look at that? It seems like Romney was full of it the whole time and now we have numbers to prove it. It’s hilarious how he’s vacillated on a deduction cap, but it doesn’t matter since every value in his range is just as stupid and unfeasible as the others. He’s trying to sell us a pig in a poke, and he’s angrier and angrier that the voting public won’t just swallow his “I’m a businessman line, I make money.” line and shut up. He can’t understand why he can’t dupe half of us into signing up for an eternity of new modern sharecropping where the corporate leadership owns us, the tools we use, and the goods we produce. He’s entitled, he’s imperious, he’s clueless, he’s duplicitous, and he’s malignant. I keep waiting for Ann to screw up and drop the royal “we” on us. Mitt Romney, the Pharaoh That Wasn’t.

Oct 17, 2012 12:46am EDT  --  Report as abuse
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