Mitt Romney this week unveiled a new tax plan that includes a 20 percent reduction in all marginal income tax rates. Previously, Romney had said that he’s not concerned about the very rich and is “proposing no tax cuts for the rich.” But during this week’s GOP primary debate, he reneged on that position, saying, “number one, I said that we’re going to cut taxes on everyone across the country by 20 percent, including the top 1 percent.”
Romney’s new tax cut may reduce all tax rates by the same amount, but it gives most of its benefits to the already wealthy. The Tax Policy Center had modeled a 20 percent reduction in all income tax rates, and as this table shows, nearly half the benefit of such a cut would go to the richest 5 percent of Americans, with more than 25 percent of the benefit going to the richest 1 percent, compared with current policy.
Under the plan, someone in the richest 1 percent of Americans would receive a $60,000 tax cut, while someone in the richest 0.1 percent — those making $1.7 million or more — would receive a $264,000 tax cut.
This analysis actually understates how much of the benefit would go to the wealthy under Romney’s plan, because the TPC included in its model a 20 percent reduction in the Alternative Minimum Tax, whereas Romney would abolish the AMT completely. Meanwhile, Romney’s cuts would cost $10.7 trillion over ten years, four times the cost of the Bush tax cuts.
Romney insists that his tax cut will be deficit neutral, because of unspecified deductions and credits that he is going to eliminate. But as Prof. James Kwak noted, the math for Romneysimply doesn’t add up. So all he’s doing is promising a massive tax cut for the rich now, with some hand-waving about how he’d pay for it later.