Fact Check: Romney’s Tax Claims Challenged by Nonpartisan Report
Mitt Romney made two claims about his tax plan that deserve scrutiny: That it would not lower the tax burden on upper-income households and would not add $5 trillion to the debt over the decade.
Romney’s proposed tax changes would work like this: He would cut income tax rates by 20% across the tax brackets and eliminate taxes on capital gains and dividends for those earning less than $200,000; but to avoid lost revenue – keeping the plan “revenue neutral” – he calls for closing tax loopholes and deductions enjoyed by upper-income households.
“My number one principle is there’ll be no tax cut that adds to the deficit,” Romney said during Wednesday night’s debate. ‘I want to underline that – no tax cut that adds to the deficit. But I do want to reduce the burden being paid by middle-income Americans. And to do that that also means that I cannot reduce the burden paid by high-income Americans.’
The nonpartisan Tax Policy Center, a joint project of the Urban Institute and Brookings Institution, has said the Romney proposal would cost $360 billion in the first year before it is offset by closing loopholes, which others have extrapolated to estimate that it would amount to $5 trillion over the decade.
But Romney’s claim that his tax plan will not benefit upper-income earners runs into trouble in the Tax Policy Center assessment.
The report said the loopholes – popular deductions including those for mortgage interest, charitable giving and others – are not plentiful enough at the top of the income scale to cover the estimated $360-billion annual cost of reducing tax rates by 20%.