Republican Presidential candidate Mitt Romney is facing demands from his fellow conservatives to provide more details on his tax reform plans.
Despite winning the Iowa caucus Tuesday in what he acknowledged was an eight-vote “squeaker” over rival candidate Rick Santorum, Romney is encountering fresh questions over his tax plans, along with his reticence over releasing his own tax returns (see Romney May Not Release Tax Return). Romney had proposed several tax reform ideas back in September as part of a larger 160-page plan for generating jobs and economic growth (see Romney Proposes Tax Reform Plan). However, he is now being criticized by people at some conservative groups such as the Club for Growth and the Cato Institute for not providing as many details in his plan as some other Republican candidates such as Rick Perry and Newt Gingrich, according to Reuters.
Romney’s plan calls for reductions in the corporate tax rate from a statutory maximum of 35 to 25 percent, along with the elimination of estate taxes. Romney would also eliminate taxes on capital gains, interest and dividends for those making $200,000 or less. The long-term goal would be to pursue a flatter, simpler tax structure and a transition to a “territorial” corporate tax system under which corporate income would only be taxed if it is earned in the U.S.
However, apparently there isn’t enough detail in his proposals to be able to analyze the full effects of the plan, which could be a good thing for Romney. Gingrich’s plan, which would allow taxpayers to choose either a flat tax or the current Tax Code, has been criticized as adding unnecessary complexity to the tax prep process, and could potentially add billions or even trillions to the budget deficit, according to an analysis by the Tax Policy Center (see Gingrich Plan Would Lower Taxes $1.3 Trillion).
Nevertheless, the Tax Policy Center—which operates under the auspices of the Urban Institute and the Brookings Institution think tanks—has gone ahead and done its best to analyze the Romney tax plan, based on what he has said so far and further details that it gleaned from Romney campaign advisors. The analysis found that the plan would cut taxes for millions of households but provide most of its benefits for those with the highest incomes.
The plan could potentially also increase taxes by more than 60 percent for households making less than $20,000 a year. But that's assuming that Romney would not extend the more generous expanded versions of the Child Tax Credit and the Earned Income Tax Credit that were passed in 2009, and that the American Opportunity Tax Credit for tuition would expire.
Like the Gingrich plan, Romney's would significantly cut corporate taxes, but add hundreds of billions of dollars to the deficit, according to a post by TaxVox blogger Howard Gleckman of the Urban Institute. The Tax Policy Center estimates that up to $600 billion would be added to the deficit by 2015 under Romney's plan.
Not that it matters much. After all, whatever a candidate says they’re in favor of on the stump is bound to change once they’re in office, and Romney has been known to change his opinions on more than a few issues over the years.