How Romney Could Raise Taxes on 95% of the Country—in 1 Tall Graph

Mitt Romney's tax plan could force 95 percent of the country to pay more, while cutting taxes for the "1%" by tens of thousands of dollars, according to a new analysis from the Tax Policy Center and the Brookings Institution.

The Romney plan begins by cutting marginal rates by 20 percent and eliminating the estate tax and Alternative Minimum Tax, which would decrease federal tax revenue by $360 billion by 2015. This report considered what would happen if Romney eliminated tax expenditures to make his plan revenue-neutral, so that it wouldn't blow an enormous hole in our budget. Here's what they found: The revenue-neutral Romney plan would raise taxes on a typical family by more than $600. A household making between half-a-million and $1 million would get a tax cut equal to almost twice the disposable income of the poorest 20 percent.

Thumbnail image for romneytax3.png

Think about this plan as two steps. Step one, Romney's intended tax cuts, digs a hole. Step two is filling that hole by cutting tax spending, like the mortgage interest deduction and child tax credit. Even with a careful pruning of tax spending, the inevitable result is to massively swing the burden of taxes toward the "bottom 95%" because the top benefits so much from Romney's step one.

There are two reasons why this analysis might understate exactly how regressive the Romney plan is. First, the researchers started by eliminating tax expenditures for the highest-income groups and worked their way down. But it's impossible to expect Congress would completely eliminate all tax expenditures above a certain level. Second, the analysis doesn't include possible cuts to government spending, which tends to benefit low- and middle-income households more than tax expenditures. If Romney leaves military spending levels near their current share of GDP, the cuts would focus even more on programs that provide services or cash to the poor, sick, and elderly. That's not me being hyperbolic: Poor, sick, and old is simply where the vast majority of non-combat government spending goes.

We can argue over methodology and details, but there are a few things that can't be debated away. First, the Romney plan and the Obama plan both use the Bush tax cuts as a canvas, but from there, they paint very different pictures. Obama begins by raising taxes at the top, and Romney begins by cutting tax rates that benefit the top. Second, there's no getting around the fact that Romney's plan would make the tax code less progressive. "It is not mathematically possible to design a revenue-neutral plan that preserves current incentives for savings and investment and that does not result in a net tax cut for high-income taxpayers and a net tax increase for lower- and/or middle-income taxpayers," the study concludes.


>

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

How to Build a Tornado

A Canadian inventor believes his tornado machine could solve the world's energy crisis. The only problem? He has to prove it works.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

How to Build a Tornado

A Canadian inventor believes his tornado machine could solve the world's energy crisis.

Video

A New York City Minute, Frozen in Time

This short film takes you on a whirling tour of the Big Apple

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we save the night sky?

Video

The Faces of #BlackLivesMatter

Scenes from a recent protest in New York City

Video

Ruth Bader Ginsburg on Life

The Supreme Court justice talks gender equality and marriage.

Video

The Pentagon's $1.5 Trillion Mistake

The F-35 fighter jet was supposed to do everything. Instead, it can barely do anything.

More in Business

Just In