WASHINGTON (AP) — Republican Mitt Romney’s tax plan would increase taxes on low-income families while cutting taxes for the middle-class and the rich, according to an independent study released Thursday.
On average, households making less than $20,000 would see their taxes increase by more than 60 percent, said the Tax Policy Center, a Washington research group that studied the Romney plan.
Households making between $50,000 and $75,000 would get small tax cuts, averaging 2.2 percent, or about $250, the study said. People making more than $1 million would get tax cuts averaging 15 percent, or about $146,000.
“Virtually everybody with a big income is getting a tax cut,” said Roberton Williams, a senior fellow at the Tax Policy Center.
Overall, Romney’s plan would reduce tax revenues by $180 billion in 2015, adding to the federal budget deficit, the study said. Romney’s campaign disputes the estimate, saying tax cuts in the plan would help improve the economy, leading to more revenue.
Fresh off a slim victory in the Iowa caucuses, Romney is the front-runner for the GOP nomination for president. His tax plan is less sweeping than those proposed by some of his rivals. He says he will push for “a fundamental redesign of our system.” But initially, his plan maintains the current tax rates while cutting corporate taxes and reducing taxes on investments.
Romney’s plan would cut the top corporate tax rate form 35 percent to 25 percent, eliminate investment taxes for the middle class and make permanent a massive package of tax cuts first enacted under President George W. Bush.
Romney would also repeal tax increases on the wealthy that were enacted as part of President Barack Obama’s health care package. His plan, however, would allow some tax cuts enacted under Obama to expire.
The Obama tax cuts, first enacted as part of the massive economic stimulus package passed in 2009, targeted low-income families with children, including many people who don’t make enough money to pay any federal income taxes. They included an expanded tax credit for college students, a more generous Earned Income Tax Credit for families with three or more children, and a more generous child tax credit for low-income families.
Like the Bush tax cuts, the Obama tax cuts are scheduled to expire at the end of the year. Romney’s campaign says letting the Obama tax cuts expire doesn’t amount to a tax increase.
“Mitt Romney has not proposed raising taxes. In fact, he laid out a blueprint for governing that includes dramatic spending cuts to reduce the deficit and pro-growth tax policies that permanently extend the Bush tax cuts, dramatically cut the corporate tax rate to create jobs, and deliver real tax relief to middle-income taxpayers,” campaign spokeswoman Andrea Saul said.
Other GOP candidates have called for more sweeping tax plans. Former House Speaker Newt Gingrich and Texas Gov. Rick Perry have both called for versions of the flat tax, in which all income is taxed at the same rate. Former Sen. Rick Santorum of Pennsylvania has called for reducing the number of tax brackets from six to two.
Previous studies by the Tax Policy Center have found that plans by Gingrich and Perry would result in big tax cuts for the wealthy, reducing tax revenue by billions each year. The center has not yet done a comprehensive analysis of Santorum’s plan, though Williams said one is planned.
The Tax Policy Center is a research group formed by two Washington think tanks, the Urban Institute and the Brookings Institution. Its researchers regularly testify before Congress on tax policy and its analyses during the 2008 presidential campaign were widely circulated.