Just how much money would Romney’s deduction cap bring in?
From CNN Money: Tax deduction cap: How much would it raise and who’d pay?
Romney has said he would pay for his plan in two ways: by curbing tax breaks, primarily on the wealthy, and by spurring economic growth to generate new revenue.
To rein in tax breaks, he might seek to limit how much tax filers can claim in itemized deductions. And he even suggested that such deductions could be phased out entirely for high-income households.
But here’s why that alone would fall short: Repeal of all itemized deductions would raise just under $2 trillion over a decade, the Tax Policy Center estimates.
So any cap would raise even less.
Romney has said a cap might be set at $17,000, $25,000 or $50,000, and his campaign has said it could be adjusted to meet targets for revenue and income distribution. According to the Tax Policy Center, revenue generated would range from $763 billion under a $50,000 cap to $1.7 trillion under a $17,000 cap.
So, using that rare talent for arithmetic that apparently only us liberals have, I can deduce that even with his lowest proposed cap ($17,000), Romney’s plan would still come up about $3.3 TRILLION short of being “revenue-neutral” in the ten year period.
Romney will no doubt claim that he’ll make this gap up with all that extra tax money from his magical job growth! Except to just reach “revenue-neutral,” that growth would have to result in an average of $330 billion in extra income tax revenue per year.
Now, I’m having a little trouble nailing down precise numbers for how much the government is collecting in Federal income taxes, but everything I’m seeing puts it somewhere between $1 trillion - $1.2 trillion per year. Meaning, for Romney’s tax plan to be revenue-neutral, his economic growth would have to create an extra 25-33% in income tax revenue per year….and that’s not even factoring in the loss of revenue that happens when you cut the tax rates by 20% across the board.
“The numbers definitely add up.” No Mitt. They don’t.