President Barack Obama and his Republican rival, former Massachusetts Governor Mitt Romney, engaged in a lively and at times ferocious debate that covered a range of topics, including taxes, the economy, Libya and women’s health.

Obama took a more aggressive stance during Tuesday night’s debate at Hofstra University in Hempstead, N.Y., in an effort to make up for lost ground after a subdued performance during their first debate two weeks ago swung the poll numbers in Romney’s direction (see Romney Debates Obama, Says He May Need a New Accountant).

Obama took aim at Romney’s tax plan. “Governor Romney doesn’t have a five-point plan,” he said. “He has a one-point plan. And that plan is to make sure that folks at the top play by a different set of rules. That’s been his philosophy in the private sector, that’s been his philosophy as governor, that’s been his philosophy as a presidential candidate. You can make a lot of money and pay lower tax rates than somebody who makes a lot less. You can ship jobs overseas and get tax breaks for it. You can invest in a company, bankrupt it, lay off the workers, strip away their pensions, and you still make money. That’s exactly the philosophy that we’ve seen in place for the last decade. That’s what’s been squeezing middle-class families.”

Tax Deductions
Romney was asked by a voter in the audience about his tax reform plan and whether it would require eliminating various deductions such as for mortgage interest, charitable contributions, the child tax credit and education credits. “I want to bring the rates down, I want to simplify the tax code, and I want to get middle-income taxpayers to have lower taxes,” Romney responded. “And the reason I want middle-income taxpayers to have lower taxes is because middle-income taxpayers have been buried over the past four years. You’ve seen, as middle-income people in this country, incomes go down $4,300 a family, even as gasoline prices have gone up $2,000. Health insurance premiums, up $2,500. Food prices up. Utility prices up. The middle-income families in America have been crushed over the last four years. So I want to get some relief to middle-income families.”

Romney declined to specify which deductions he would eliminate, but he stressed that they would only be limited for upper-income taxpayers earning more than $200,000 a year. “Now, how about deductions, because I’m going to bring rates down across the board for everybody, but I’m going to limit deductions and exemptions and credits, particularly for people at the high end, because I am not going to have people at the high end pay less than they’re paying now. The top 5 percent of taxpayers will continue to pay 60 percent of the income tax the nation collects. So that will stay the same. Middle-income people are going to get a tax break.”

Romney explained that he might allow upper-income people to choose for themselves which tax deductions they would take. He and his running mate House Budget Committee chairman Paul Ryan, R-Wis., had previously said they would leave that to Congress to decide once he was elected to office.

“And so, in terms of bringing down deductions, one way of doing that would be say everybody gets—I’ll pick a number—$25,000 of deductions and credits, and you can decide which ones to use,” he said. “Your home mortgage interest deduction, charity, child tax credit, and so forth, you can use those as part of filling that bucket, if you will, of deductions.”

Romney added that he would lower tax rates for capital gains, dividends and interest for the middle class. “But your rate comes down and the burden also comes down on you for one more reason, and that is every middle-income taxpayer no longer will pay any tax on interest, dividends or capital gains,” he said. “No tax on your savings. That makes life a lot easier. If you’re getting interest from a bank, if you’re getting a statement from a mutual fund or any other kind of investment you have, you don’t have to worry about filing taxes on that, because there’ll be no taxes for anybody making $200,000 per year and less, on your interest, dividends and capital gains. Why am I lowering taxes on the middle-class? Because in the last four years, they’ve been buried. And I want to help people in the middle class.”

Romney insisted that he would not reduce taxes for upper-income taxpayers. “I will not under any circumstances reduce the share that’s being paid by the highest-income taxpayers,” he emphasized. “And I will not, under any circumstances increase taxes on the middle class. The President’s spending, the President’s borrowing will cost this nation to have to raise taxes on the American people. Not just at the high end. A recent study has shown the people in the middle class will see $4,000 per year in higher taxes as a result of the spending and borrowing of this administration. I will not let that happen. I want to get us on track to a balanced budget, and I’m going to reduce the tax burden on middle-income families. And what’s that going to do? It’s going to help those families, and it’s going to create incentives to start growing jobs again in this country.”

Obama contended that Romney had previously pledged to cut taxes for people at all income levels, including the wealthy, in contrast with his own tax plan.

“Now, Governor Romney has a different philosophy,” said Obama. “He was on ‘60 Minutes’ just two weeks ago, and he was asked, 'Is it fair for somebody like you, making $20 million a year, to pay a lower tax rate than a nurse or a bus driver, somebody making $50,000 a year?' And he said, 'Yes, I think that’s fair.' Not only that, he said, 'I think that’s what grows the economy.'”

Obama argued that Romney had promised tax cuts for everybody during the primaries and had only recently changed his plan to limit deductions for upper-income taxpayers. “When Governor Romney stands here, after a year of campaigning, when during a Republican primary he stood on stage and said ‘I’m going to give tax cuts,’ he didn’t say ‘tax rate cuts,’ he said, ‘tax cuts to everybody,’ including the top 1 percent. You should believe him because that’s been his history. And that’s exactly the kind of top-down economics that is not going to work if we want a strong middle class and an economy that’s striving for everybody.”

Romney insisted that his tax plan would not cut taxes for upper-income people. “The top 5 percent will continue to pay 60 percent, as they do today,” he said. “I’m not looking to cut taxes for wealthy people. I am looking to cut taxes for middle-income people.”

Romney said he would also lower taxes for small businesses. “And why do I want to bring rates down, and at the same time lower exemptions and deductions, particularly for people at the high end?” he asked. “Because if you bring rates down, it makes it easier for small business to keep more of their capital and hire people. And for me, this is about jobs. I want to get America’s economy going again. Fifty-four percent of America’s workers work in businesses that are taxed as individuals. So when you bring those rates down, those small businesses are able to keep more money and hire more people.”

CNN correspondent Candy Crowley, who moderated the debate, asked Obama about Romney’s tax plan, and whether it would only cut taxes for the middle class. He contended that Romney’s tax plan did not add up and that it would “blow up” the deficit by $7 trillion to $8 trillion.

“Look, the cost of lowering rates for everybody across the board 20 percent, along with what he also wants to do in terms of eliminating the estate tax, along with what he wants to do in terms of corporate changes in the Tax Code, it costs about $5 trillion,” said Obama. “Governor Romney then also wants to spend $2 trillion on additional military programs even though the military’s not asking for them. That’s $7 trillion. He also wants to continue the Bush tax cuts for the wealthiest Americans. That’s another trillion dollars—that’s $8 trillion. Now, what he says is he’s going to make sure that this doesn’t add to the deficit and he’s going to cut middle-class taxes. But when he’s asked, how are you going to do it, which deductions, which loopholes are you going to close, he can’t tell you. The fact that he only has to pay 14 percent on his taxes when a lot of you are paying much higher—you know, he’s already taken that off the board. Capital gains are going to continue to be at a low rate, so we’re not going to get money that way. We haven’t heard from the governor any specifics, beyond Big Bird and eliminating funding for Planned Parenthood, in terms of how he pays for that.

“Now, Governor Romney was a very successful investor,” Obama added, turning to Romney. “If somebody came to you, Governor, with a plan that said, ‘Here, I want to spend 7 or $8 trillion, and then we’re going to pay for it, but we can’t tell you until maybe after the election how we’re going to do it,’ you wouldn’t have taken such a sketchy deal. And neither should you, the American people, because the math doesn’t add up.”

Corporate Taxes
Later in the debate, Obama compared his corporate tax plan with Romney’s plan. “Both Governor Romney and I agree, actually, that we should lower our corporate tax rate. It’s too high,” he said. “But there’s a difference in terms of how we would do it. I want to close loopholes that allow companies to deduct expenses when they move to China, that allow them to profit offshore and not have to get taxed, so they have tax advantages offshore. All those changes in our tax code would make a difference. Now Governor Romney actually wants to expand those tax breaks. One of his big ideas when it comes to corporate tax reform would be to say, ‘If you invest overseas, you make profits overseas, you don’t have to pay U.S. taxes.’ But of course if you’re a small business or a mom-and-pop business or a big business starting up here, you’ve got to pay even the reduced rate that Governor Romney’s talking about. And it’s estimated that that will create 800,000 new jobs. Problem is, they’ll be in China or India or Germany. That’s not the way we’re going to create jobs here.”

Romney defended his corporate tax plan. “We have to make America the most attractive place for entrepreneurs, for people who want to expand a business,” he argued. “That’s what brings jobs in. The President’s characterization of my tax plan is completely false.”

47 Percent
In the final question of the debate, the two candidates were asked to debunk what they saw as the biggest misperceptions of themselves. Romney took the opportunity to contend that he cares about 100 percent of the American people, not just the wealthy.

“I want a hundred percent of the American people to have a bright and prosperous future,” he said. “I care about our kids. I understand what it takes to make a bright and prosperous future for America again. I spent my life in the private sector, not in government. I’m a guy who wants to help, with the experience I have, the American people.”

Obama took the opportunity to argue that he believes in the free enterprise system, while pointing to Romney’s earlier remarks at a campaign fundraiser about the 47 percent of the U.S. population that does not pay federal income taxes.

“I believe that the free enterprise system is the greatest engine of prosperity the world’s ever known,” said Obama. “I believe in self-reliance and individual initiative and risk-takers being rewarded. But I also believe that everybody should have a fair shot and everybody should do their fair share and everybody should play by the same rules, because that’s how our economy is grown. That’s how we built the world’s greatest middle class. And that is part of what’s at stake in this election. There’s a fundamentally different vision about how we move our country forward. I believe Governor Romney is a good man. He loves his family, cares about his faith. But I also believe that when he said behind closed doors that 47 percent of the country considers themselves victims who refuse personal responsibility, think about who he was talking about: folks on Social Security who have worked all their lives, veterans who have sacrificed for this country, students who are out there trying to hopefully advance their own dreams, but also this country’s dreams, soldiers who are overseas fighting for us right now, people who are working hard every day, paying payroll tax, gas taxes, but don’t make enough income. And I want to fight for them. That’s what I’ve been doing for the last four years, because if they succeed, I believe the country succeeds.”