During Tuesday’s second presidential debate, Republican nominee Mitt Romney floated a new idea to pay for his tax plan, which provides nearly $5 trillion in tax cuts. Romney introduced this proposal after analysts showed that Romney can’t mathematically achieve his goals of reducing income tax rates by 20 percent while not increasing middle class taxes or adding to the deficit.
But a Tax Policy Center analysis found Romney’s idea, to cap the amount of deductions each taxpayer can take advantage of at $25,000, also fails to make his plan add up.
And as the Center for American Progress’ Seth Hanlon noted in a column on Thursday, Romney’s plan would still provide a massive tax cut to the wealthiest Americans, even if a deduction cap were in place. After they hit the cap on deductions, members of the top one percent would get tax cuts totaling more than $105,000. And for wealthier taxpayers, the breaks get even bigger, Hanlon found:
The tax cuts from Romney’s plan would come on top of the reductions they received from extending the Bush tax rates, which Romney wants to make permanent. According to Citizens for Tax Justice, the average millionaire would save more than $250,000 a year when the Bush and Romney tax cuts are combined, even if Romney eliminates all of their deductions.
Romney also floated another idea: capping deductions at $50,000 instead of $25,000. That plan would indeed make the tax cut for the rich smaller, but it would also reduce the amount of revenue gained, making the math of Romney’s plan even worse. And it would render the idea of capping deductions almost irrelevant, since the average member of the top one percent claimed just over $43,000 in tax deductions last year.