The Brookings Institute has just released a report analyzing the impact of Republican candidate, Mitt Romney’s tax reform proposals, including extending relief for wealthy Americans.
Brookings predicts that the candidate’s policies would cut federal tax revenue by $360bn in 2015 with cuts predominately favouring upper income taxpayers.
In addition, taxpayers with incomes over $1 million would see their after-tax income increase by 8.3%, gaining an average tax cut of about $175,000.
At the lower end, after-tax income of taxpayers earning less than $30,000 would decrease by about 0.9%, representing an average tax increase of $130.
The Report added that the huge drop in revenue was bound to have a social cost. The authors state in the Guardian;
“Such a reduction by itself would be unprecedented and would require deep reductions in many popular tax benefits ranging from the mortgage interest deduction, the exclusion for employer-provided health insurance, the deduction for charitable contributions and benefits for low- and middle-income families and children,” the report’s authors wrote.
Looney told The Guardian in an interview that the study had sought to be scrupulously fair and transparent in its projections and predictions. “If you look at the paper we are very explicit about the assumptions that we make. We have bent over backwards to be fair. At the end of the day this is just about basic math,” he said.
The Obama campaign has of course, seized on the report’s findings and assailed Romney’s proposals as pandering to the rich at the cost of the middle class and poor.
Mitt Romney’s campaign responded by accusing the Brookings Institute of liberal bias.
The Boston Globe also writes:
The analysis was conducted by three Brookings economists, including William G. Gale, an economic adviser to President George H. W. Bush.
They determined Romney’s tax plan — which includes extending all Bush-era tax cuts, slashing all income tax rates by a fifth and reducing the corporate tax rate to 25 percent — would reduce federal revenues by $456 billion in 2015.
Romney has not specified how he would compensate for the sweeping tax cuts. But making up for the lost revenue, Brookings analysts said, “necessitates a reduction of roughly 65 percent of available tax expenditures.”
“Such a reduction by itself would be unprecedented,” Brookings reported, “and would require deep reductions in many popular tax benefits, ranging from the mortgage interest deduction, the exclusion for employer-provided health insurance, the deduction for charitable contributions, and benefits for low- and middle-income families and children like the [earned income tax credit] and child tax credit.”
What do you think? Is Romney Robin Hood in reverse?