President Obama has seized on a new study by the Brookings Institution and Tax Policy Center to claim that Mitt Romney plans to increase taxes on the middle class to pay for tax cuts for wealthier Americans. “In order to afford just one $250,000 tax cut for somebody like Mr. Romney, 125 families like yours would have to pay another $2,000 in taxes each and every year,” Obama told the audience at a campaign event in Mansfield, Ohio, on Wednesday. It subsequently became fodder for Obama’s latest attack ad. But the reality is a bit more complicated than Obama’s presentation.
As a reminder, Romney’s tax plan calls for a 20 percent across-the-board reduction in federal income tax rates, the elimination of the inheritance tax and a repeal of the alternative minimum tax. He said his plan would be revenue-neutral, meaning that whatever money the U.S. Treasury would lose as a result of reducing tax rates would be recouped by economic growth and the elimination of various loopholes and deductions. Romney has not specified which deductions he would reduce or eliminate. In the absence of details, researchers at the center-left Brookings and the liberal Tax Policy Center conducted what they described as an “exercise” about the deductions and loopholes Romney would have get rid of to make his plan revenue-neutral.
