Mitt Romney’s tax plan would be a boon for the wealthy, but a tax hike for 95% of Americans, according to a new nonpartisan study.
The report by researchers at the Tax Policy Center, a joint project of the Urban Institute and Brookings Institution, examined Romney’s suggestion of an across-the-board 20% income tax cut financed by closing existing loopholes and concluded there was no way to make the numbers work without burdening the vast majority of Americans with higher taxes.
Romney has not said which tax breaks he would end to finance his plan, but he has suggested that he would only look to breaks that benefit the wealthy. The report concluded that notion is a fantasy no matter how it’s constructed: There simply are too many middle class tax breaks on the table to avoid skewing the burden against the average American.
“Even if tax expenditures are eliminated in a way designed to make the resulting tax system as progressive as possible, there would still be a shift in the tax burden of roughly $86 billion from those making over $200,000 to those making less than that amount,” the report reads.
That $86 billion should lend quite the boost to the luxury goods market: “Americans making over $1 million would see an increase in after-tax income of 4.1 percent (an $87,000 tax cut), those making between $500,000 and $1 million would see an increase of 3.2 percent (a $17,000 tax cut), and those making between $200,000 and $500,000 would see an increase of 0.8 percent (a $1,800 tax cut).”
As for the other 95% of Americans? Not so much. The average tax increase needed to pay for the elite’s gains would be $500 per household.
President Obama, who is speaking in Ohio on Wednesday, is planning to seize on the study.
“He’s not asking you to contribute more to pay down the deficit, or to invest in our kids’ education,” Obama is expected to say, according to prepared remarks released by the campaign. “He’s asking you to pay more so that people like him can get a tax cut.”
This post has been updated.
Benjy Sarlin is a reporter for Talking Points Memo and co-writes the campaign blog, TPM2012. He previously reported for The Daily Beast/Newsweek as their Washington Correspondent and covered local politics for the New York Sun.