Mitt Romney and his campaign have consistently refused to divulge the loopholes and deductions that Romney would supposedly eliminate in order to cover the cost of his massive tax cuts for the rich and corporations. One adviser even responded “energy independence” when asked for a specific tax loophole.
During Tuesday night’s debate, Romney continued his ducking and dodging. Instead of naming any deductions, he merely re-upped on a proposal to cap the total amount of deductions that taxpayers are allowed to use:
And so, in terms of bringing down deductions, one way of doing that would be say everybody gets — I’ll pick a number — $25,000 of deductions and credits, and you can decide which ones to use. Your home mortgage interest deduction, charity, child tax credit, and so forth, you can use those as part of filling that bucket, if you will, of deductions.
Eliminating all itemized deductions would yield about $2 trillion of additional revenue over ten years if we cut all rates by 20 percent and eliminate the AMT. Capping deductions would generate less additional revenue, and the higher the cap, the smaller the gain. Limiting deductions to $17,000 would increase revenues by nearly $1.7 trillion over ten years. A $25,000 cap would yield roughly $1.3 trillion and a $50,000 cap would raise only about $760 billion. [...]
Suggesting limits on deductions was Governor Romney’s first public statement about how he might offset the revenue lost by cutting tax rates. Without more specifics, we can’t say how much revenue such limits would actually raise. But these new estimates suggest that Romney will need to do much more than capping itemized deductions to pay for the roughly $5 trillion in rate cuts and other tax benefits he has proposed.
The Tax Policy Center in August released what economists have called the “definitive” study of Romney’s tax plan, which showed that he can’t possibly cut all income tax rates by 20 percent, prevent a middle class tax increase, and not add to the deficit. Assuming he’s committed to the 20 percent reduction, he will have to either increase middle class taxes or increase the deficit. And capping deductions doesn’t change that inescapable fact.