Thursday, August 23, 2012

Romney Plan Would Raise Taxes On Middle Class To Finance Massive Corporate Tax Cut


A recent analysis based on the loose outlines of Mitt Romney’s proposed tax plan — which would disproportionately benefit the wealthy and corporations — found that to remain revenue neutral, as Romney insists it will, it would have to raise taxes on middle- and lower-class families. The result, the Tax Policy Center concluded, is that middle class families would see a $2,000 tax hike, and that is based on the most generous assumptions, since Romney has yet to provide specific details of the plan.
In its analysis, TPC assumed Romney would pay for the corporate tax cuts by closing loopholes in the corporate tax code, but this week, the Romney campaign said that was not the case. Instead, the campaign told TPC that “cuts in corporate tax preferences were not meant to finance the initial rate cut to 25 percent but instead would pay for a subsequent revenue-neutral set of proposals that would reduce corporate rates further and enact a territorial system.”
By taking the corporate loopholes off the table, Romney is ensuring that middle class families will see an even larger tax hike than TPC previously assumed, as Center for American Progress Action Fund Director for Fiscal Reform Seth Hanlon noted in a column published today:
The TPC authors confirm that accounting for Romney’s unpaid-for corporate tax cuts would necessitate “even larger cuts to tax expenditures [i.e. tax breaks], and correspondingly larger increases in taxes on middle- and/or lower-income taxpayers,” than their original study found.
How big? The original TPC study found that in a single year, 2015, Romney’s plan would shift at least $86 billion of the tax burden from households with incomes over $200,000 to households with incomes below that level. TPC estimates that in the same year, Romney’s unpaid-for corporate tax cuts would cost $96 billion. Therefore, the tax increases on the middle class that TPC originally estimated – at least $2,000 for families and $500 for all taxpayers with incomes under $200,000 – would likely be around twice as much if Romney’s unpaid-for corporate tax cuts are taken into account.
That’s right: according to the TPC analysis — which, again, uses the most generous assumptions to fill in the blanks Romney left in the plan — the Romney plan would raise the average middle class family’s tax rate by as much as $4,000 to finance trillions of dollars in tax cuts for the rich and corporations. That includes the cost of a transition to a tax system that not only dramatically lowers the amount corporations will pay on domestic profits, but also the amount they pay on profits earned overseas and return to the U.S. — a system that will encourage outsourcing and further stashing of profits in offshore tax havens.

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