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Wealthy would benefit most from Romney plan

The general election is shaping up to be a fight over the middle class. Both President Barack Obama and Mitt Romney, the GOP frontrunner, have continuously argued in speeches that their policies would most help the middle class.

But Romney’s argument took a hit last night, undercut by a detailed analysis by nonpartisan Tax Policy Center that showed Romney’s plan focuses tax cuts on the rich, while cutting taxes marginally for the middle class. It also would effectively raise taxes on those making less than $40,000 a year, the analysis found, when tax cuts put in place by Obama would be allowed to expire.

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"If I'm going to use precious dollars to reduce taxes, I want to focus on where the people are hurting the most, and that's the middle class," Romney said at an Oct. 11 debate. “"I'm not worried about rich people. They are doing just fine. The very poor have a safety net; they're taken care of. But the people in the middle, the hard-working Americans, are the people who need a break. And that is why I focused my tax cut right there."

On Oct. 5, he said the middle class was a victim of “friendly fire” from Obama, who contends he is a “warrior for the middle class.” “If that's the case, I think there has been a severe case of friendly fire,” Romney said. “Because he has not done what the middle class of America needs to have a prosperous and bright future. In fact almost everything he did has hurt the middle class."

But those are increasingly difficult arguments to make when, under Romney’s plan, those making more than $1 million a year would see a tax cut of about $146,000, a 6.9 perent change in after-tax income, while those making between $50,000 and $75,000 would see just an average tax cut of about $250, just a 3.3 percent change, according to the center’s analysis.

In fact, not only is the amount of after-tax income greater the higher the income level, but the percent change also increases the more money someone makes.

The Romney campaign takes issue with the analysis, especially considering these assumptions in the center’s analysis: “TPC’s analysis measures the change in tax liabilities against two alternative baselines: current law, which assumes that the 2001-10 tax cuts all expire in 2013 as scheduled, and current policy, which assumes that the 2011 law is permanent (except for the one-year payroll tax cut and temporary investment incentives). Compared with the current law baseline, the Romney plan would cut taxes for about three-fourths of taxpayers by an average of more than $4,700. In contrast, compared with current policy, about 13 percent of tax units would see their 2015 taxes go up an average of more than $900 while 42 percent would get tax cuts averaging nearly $2,900.”

Romney spokeswoman Andrea Saul said in an email: “Mitt Romney has not proposed raising taxes. In fact, he laid out a blueprint for governing that includes dramatic spending cuts to reduce the deficit and pro-growth tax policies that permanently extend the Bush tax cuts, dramatically cut the corporate tax rate to create jobs, and deliver real tax relief to middle-income taxpayers. President Obama has raised taxes 19 times, stunting our economic growth and leading us further down the path toward a European-style entitlement society.”

Here’s how the numbers break down from the Tax Policy Center’s table:

Less than $10,000: $112 increase
$10,000-$20,000: $191 increase
$20,000-$30,000: $126 increase
$30,000-$40,000: $14 increase
$40,000-$50,000: $27 cut
$50,000-$75,000: $249 cut
$100,000-$200,000: $1,146 cut
$200,000-$500,000: $5,195 cut
$500,000-$1 million: $19,853
$1 million or more: $145,568