* New report assumes end of three tax breaks
* Romney campaign welcomes latest analysis
* Republican candidate's plans called 'steadfastly vague'
By Kim Dixon
WASHINGTON, Sept 25 Conservatives on Tuesday
challenged a study that said Mitt Romney's tax plans would hurt
the middle class and help the rich, arguing it was predicated on
faulty assumptions and that the math of his plan can work.
The nonpartisan Tax Policy Center last month caused a stir
with an analysis they said showed Republican presidential
candidate Romney's 20 percent across-the-board individual tax
cut proposal requires steeper taxes on the middle class and
would be a boon to the rich.
Romney famously called the analysis "garbage," and his
campaign attacked one of the report's authors who had worked in
the administration of President Barack Obama, whom Romney faces
in the Nov. 6 election.
Echoing criticism from other conservatives, the Heritage
Foundation, a conservative think tank in Washington, on Tuesday
released its own analysis. Its researchers concluded that by
omitting several big revenue raisers, the Tax Policy Center's
conclusion is flawed.
"The authors argue their analysis is definitive, but in fact
their choices in framing their analysis ... determined their
conclusion," Heritage economist Curtis Dubay said.
The Tax Policy Center ran the numbers on Romney's ideas,
using assumptions on Romney's support of incentives for savings
The Heritage Foundation report includes ending tax breaks
for capital gains earned at death, interest on insurance savings
and municipal bond interest, all for high-earners. The Tax
Policy Center report had initially excluded consideration of the
breaks for insurance and bond interest, but later added them
back after criticism.
Conservatives say the Tax Policy Center drew erroneous
conclusions about Romney's intentions from his generalized
Romney has not specified his plans on the three issues, and
his campaign advisers say the cuts are not off the table. The
Obama campaign has been using the Tax Policy Center analysis to
accuse Romney of secretly planning tax hikes for the middle
"Today's report by the Heritage Foundation is yet another
confirmation that the analysis the president's campaign is
basing their claims upon is flawed and completely untrue,"
Romney economic adviser Pierce Scranton said.
BREAKS FOR SAVINGS AND INVESTMENT
William Gale, one of the authors of the Tax Policy Center
report, said he did not dispute the Heritage findings but said
they were adding back in tax breaks that Romney has indicated in
general ways that he would protect.
"Yes, if you go after those three taxes on savings and if
you raise taxes on capital gains and dividends you can get the
money to pay for this," Gale, an economist, said.
The Heritage report does not include raising taxes on
capital gains and dividends, because Romney proposes to
eliminate the current 15 percent tax on capital gains and
dividends for those earning less than $200,000 a year.
Romney's tax proposal says one of its goals is to "further
reduce taxes on savings and investment."
But he does not specifically address the tax treatment of
capital gains taxes at death, municipal bond or interest on
"He certainly hasn't ruled 'in' any of these things," Gale
Conservatives say there will be wiggle room when Romney
attempts a full-blown tax code revamp if he is elected, as it
would require working with Congress and compromise.
"He is a politician trying to get elected," said Will
McBride of the Tax Foundation, which backs lower business taxes
and free markets. "He has been steadfastly vague about this."
ADDING TAX BREAKS BACK INTO THE MIX
Ending the tax break on capital gains paid at death could
raise $194 billion for the government over a five-year period,
according to the congressional Joint Tax Committee. Ending it
for high income earners only could raise $19 billion for one
year, Heritage estimated.
Eliminating the tax break for interest on life insurance
savings and municipal bond interest for high income earners
would raise about $45 billion, Heritage said.
The Tax Policy Center, which is run by a former economic
adviser to Republican president George W. Bush but includes many
Democrats, made the latter changes in an updated analysis of its
original report after criticism.
Adding back in those three tax breaks, the Heritage analysis
still comes up about $22 billion short to avoid raising taxes on
the lower and middle income groups.
Dubay and other conservatives say there are still more ways
to close that gap, including phasing out personal exemptions and
capping itemized deductions for the rich.
Romney has also said he would not raise taxes on the middle
class and that the wealthy will pay the same share of federal
taxes that they do now under his overhaul. In addition, he says
he would not bloat the federal deficit.