Mitt Romney’s latest incarnation of how to save the rich from tax increases is based on limiting tax deductions….
But his plan won’t generate enough money the way it’s presented….
The former Massachusetts governor would cut all income tax rates by 20 percent, dropping the top rate to 28 percent from 35 percent. Photographer: Andrew Harrer/Bloomberg
Immediate repeal of some of the most popular tax benefits would pay for only a 4 percent cut in U.S. income tax rates, according to an estimate by Congress’s nonpartisan scorekeeper that illustrates the mathematical and political challenges of financing rate cuts by limiting tax breaks.
The analysis by the Joint Committee on Taxation emphasizes the difficult choices facing lawmakers as they balance the benefits of rate cuts against the consequences of changing or ending deductions, such as for mortgage interest and charitable contributions. Republican presidential nominee Mitt Romney proposes a 20 percent income-tax rate cut and says he would pay for it by limiting deductions, credits and exemptions.
While there are major differences between the assumptions underlying Romney’s plan and the JCT study, the findings emphasize shortcomings in Romney’s approach, said Daniel Shaviro, a tax law professor at New York University.
“There really is no serious dispute that the parameters of their plan can’t be met,” Shaviro said. “It’s like saying you’re going to drive from Boston to Los Angeles in 10 hours without speeding. There’s just no way to make the numbers add up.”
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