Mitt Romney promised this past weekend that the wealthy would “still pay the same share of the tax burden they’re paying now” and that he’s “not looking for a tax cut for the very wealthiest.” And: “I'm not looking to reduce the burden paid by the wealthiest.”
He added, “I’m looking to bring tax rates down for everyone.”
That’s what he said on CBS’s Face the Nation, despite the Tax Policy Center’s analysis earlier this year that showed that those making more than $1 million a year would get a $146,000 a year cut from Romney’s plan (by lowering the top rate to 26.6%) – and that the poor would pay more than it currently does (because the base would be broadened).
So what’s changed? Nothing, says Roberton Williams, a senior fellow at the center, who conducted the original analysis.
The key, Williams says, is Romney’s language. And Romney’s very careful here to say, “pay the same share of the tax burden.”
That means that if his plan cuts the rate for the wealthy, which it does, then he has to make that up with which “tax preferences that he’d get rid of,” Williams said. In other words, the only way the wealthiest would pay the same share is if Romney closes unspecified tax loopholes. And that is where Romney has been vague.
Though he promises to perhaps get rid of certain deductions, he has yet to specify which. When Face the Nation moderator Bob Schieffer pressed Romney, he declined to say what he would do.
“Well, we'll go through that process with Congress,” he said, adding he’d consider certain deductions and exemptions.
Asked what his ideas are now, Romney again cited Simpson-Bowles, the bipartisan commission formed by the president to find a solution that would reduce the nation’s debt and deficits. But he would only say “deductions and exemptions,” and didn’t specify which.
In fact, it would likely be very difficult for Romney to find the deductions necessary to keep the wealthy from paying the same share, because, as Williams points out, there aren’t many “deductions or exemptions” that have an outsized benefit for the rich outside of capital gains, dividends, and exclusions for municipal bond interest.
Things like state and local tax deductions and the popular mortgage-interest deduction discussed in Simpson-Bowles, Williams said, would most benefit the middle- to upper-middle class.
Romney has already said he would not raise the capital gains tax; he would keep it at the current rate of 15 percent for those making more than $200,000 a year. So that’s one lever eliminated to make up the difference.
He has said he would at least “consider taxing some ‘carried interest’ at regular income tax rates,” the New York Times wrote. But it’s not at all clear if he would actually do that, something the private-equity and hedge-fund world would strongly oppose.
“It is really hard to maintain the distribution, maintain the same share of taxes that they are paying now,” Williams said of the wealthy under Romney’s plan.
He also points out that Romney would “extend the Bush tax cuts, but kill the Obama tax cuts,” like the earned-income tax credit expansion, child-care credits, educational tax credits, making them “less generous, less refundable.” And: “The people hit by that almost exclusively are not the rich at all.”
Obama, by contrast, has promised to raise taxes on the rich. “Every budget,” Williams noted, Obama “said he’s going to raise taxes on rich.”
But there wouldn’t be enough revenue generated from the so-called Buffet Rule -- which would tax capital gains, as if it were regular wages – or eliminating oil and gas subsidies, popular with Capitol Hill Democrats, to make a big dent in the nation’s debt and deficits.
So, the choice is: A vague plan from Romney that, of what’s known so far, disproportionately benefits the wealthy and isn’t at all clear that it would raise enough revenue to offset its cost; or Obama’s, which targets the rich, but also would do little to close the nation’s deficits.