No, Mitt Romney will not raise taxes on the middle class
Last week, President Barack Obama put his spin on a report from the Tax Policy Center by suggesting that Mitt Romney’s tax plan would hurt the middle class by raising taxes. Obama’s campaign is now running an ad in 15 states slamming Romney’s tax proposal in typical class warfare-style.
While there are still some questions that need to be answered about Romney’s tax plan, the Wall Street Journal explains that it would most definately not raise taxes on the middle class, as President Obama and others claim:
The heart of Mr. Romney’s actual proposal is a 20% rate cut for anyone who pays income taxes. This means, for example, that the 10% rate would fall to 8%, the 35% rate would fall to 28% and all the brackets in between would fall as well. The corporate tax would fall to 25% from 35%.
The plan says these cuts would be financed in a revenue-neutral way. First, by “broadening the tax base,” which means reducing or eliminating tax deductions and loopholes as in the tax reform of 1986. The Romney campaign doesn’t specify which deductions—no campaign ever does—but it has been explicit in saying that the burden would fall most on higher tax brackets. So in return for paying lower rates, the wealthy get fewer deductions.
Second, the Romney campaign says it expects to increase revenues by increasing the rate of economic growth to 4%, up from less than 2% this year and in 2011. (Separately from tax reform, but clearly relevant to budget deficits, Mr. Romney says he’d gradually reduce spending to 20% of the economy from the Obama heights of 24%-25%.)
The class warriors at the Tax Policy Center add all of this up and issue the headline-grabbing opinion that it is “mathematically impossible” to reduce tax rates and close loopholes in a way that raises the same amount of revenue. They do so in part by arbitrarily claiming that Mr. Romney would never eliminate certain loopholes (such as for municipal bond interest), though the candidate has said no such thing.
Based on this invention, they then postulate that Mr. Romney would have to do something he also doesn’t propose—which is raise taxes on those earning less than $200,000. In the Obama campaign’s political alchemy, this becomes “Romney Hood” and a $2,000 tax increase.
And while the narrative from the Obama campaign is that Romney wants to raise taxes, some of the analysts from the Tax Policy Center are crying foul. James Pethokoukis notes comments by Howard Gleckman and Donald Marron who both say that Romney’s tax plan is not a proposal to raise taxes on the middle class. Rather the issue at hand is that Romney’s tax proposal wouldn’t be revenue neutral.
The Tax Policy Center admitted that it “[did] not score Governor Romney’s plan directly as certain components of his plan are not specified in sufficient detail.” As WSJ points out, the Tax Policy Center merely notes Romney would have to either find additional revenue elsewhere by eliminating deductions, cut spending to achieve revenue neutrality or a mix of the two.
While his tax plan needs to be made more clear so there is no ambiguity, Romney would not raise taxes on the middle class.