WASHINGTON (Reuters) - Presidential hopeful Mitt Romney’s tax plan would cut revenues and increase the government’s budget deficit, while benefiting wealthy taxpayers more than others, said a report from a nonpartisan think tank released on Thursday.
The Tax Policy Center estimated that former Massachusetts Governor Romney’s plan would slash federal tax revenue by $600 billion, or 16 percent, in 2015 if the Bush tax cuts are allowed to expire at the end of this year, as presently planned.
If the Bush tax cuts do not expire, Romney’s plan would cut revenues by $180 billion in 2015, the center said.
“A Romney administration’s revenue agenda would look a lot like President George W. Bush’s, just more so,” said Howard Gleckman, resident fellow at the center, which also has analyzed the tax plans of other Republican presidential contenders, including Newt Gingrich, Rick Perry and Herman Cain.
The report comes as conservatives have been criticizing Romney, the frontrunner for Republican nomination to challenge Democratic President Barack Obama in November’s election, for not being bolder and clearer about how to fix a loophole-riddled tax system that falls far short of funding the government.
Congress has been deadlocked over taxes and spending for months and the ongoing wrangling is expected to run until the November elections and beyond, with the U.S. economy in a slow recovery and the federal budget deficit declining only slightly.
Romney has said he wants to make permanent the 2001 and 2003 tax cuts that were approved during Bush’s administration. These deep cuts, which ballooned the budget deficit, were extended in late 2010 under Obama.
The Bush tax cuts are now set to expire at the end of 2012, though an election-year political fight over them is coming.
If they go away, the Romney plan would cut taxes for about three-fourths of taxpayers by an average of more than $4,700 in 2015, the center estimated.
If the Bush tax cuts stay in place after 2012, Romney’s plan would produce a more mixed result, with a taxes declining $2,900 on average for 42 percent of taxpayers, though 13 percent would see a tax increase of average $900, the center said.
Permanently extending the Bush tax cuts could increase the federal debt held by the public by almost $3 trillion over the next 10 years, the Congressional Research Service said in September.
Obama has proposed allowing the Bush tax cuts to expire for high-income earners, but permanently extending them for middle-class taxpayers.
Obama’s proposal would increase tax revenues by $312 billion over five years, CRS said.
Wealthy taxpayers in the top 0.1 percent of earners would get an average tax cut of $482,940 in 2015, it said.
Romney has said he wants to repeal parts of Obama’s 2010 healthcare reform law and let tax provisions of the 2009 economic stimulus expire. He has called for eliminating long-term capital gains tax as well as tax on dividends and interest income for married couples with incomes under $200,000; singles making less than $100,000; and heads of households earning under $150,000.
Romney would also end a federal tax on deceased estates, but maintain a gift tax with a maximum rate of 35 percent.
Romney also wants to cut the top corporate tax rate to 25 percent from 35 percent and make a research and development tax credit permanent, while extending for one year full expensing of capital expenditures.
He supports a “tax holiday” for profits of U.S. corporations that are now parked overseas avoiding taxation, but he has not said whether or how much repatriated earnings would be taxed.
He wants to repeal a 0.9 percent tax on wages and the 3.8 percent tax on investment income of high-income individual taxpayers that were imposed by the 2010 health reform legislation and are scheduled to take effect in 2013.
Romney has spoken broadly of cutting the corporate tax rate even further, while broadening the tax base and simplifying the tax code, along with moving toward a “territorial” system that would exempt corporations foreign profits from taxation.
He wants to repeal the 0.9 percent tax on wages and the 3.8 percent tax on investment income of high-income individual taxpayers imposed by the 2010 health reform legislation and scheduled to take effect in 2013.
Reporting By Patrick Temple West; Editing by Kevin Drawbaugh