Mitt Romney’s plan revamping the tax code would end up cutting taxes for the richest 5 per cent of Americans and raising taxes on everyone else, according to new independent study from the Brookings Institute and Tax Policy centre released Wednesday morning. The study finds that Romney’s plan would end up cutting taxes by about $87,000 on millionaires under a revenue-neutral model. The top 0.1 per cent would see their after-tax revenue income rise by 4.4 per cent. Meanwhile, the study estimates that the bottom 95 per cent would see about 1.2 per cent less after-tax income. They’ll see taxes rise about $500, according to the study.
Romney’s individual tax plan consists of five key bullet points, according to his campaign website:
- Make permanent, across-the-board 20 per cent cut in marginal rates
- Maintain current tax rates on interest, dividends, and capital gains
- Eliminate taxes for taxpayers with AGI below $200,000 on interest, dividends, and capital gains
- Eliminate the Death Tax
- Repeal the Alternative Minimum Tax (AMT)
“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 authors of the Brookings/TPC study write in their conclusion.
Here’s the chart that breaks down the effects of Romney’s plan:
Photo: Brookings Institute/Tax Policy centre
The Washington Post notes that the researchers “seem to bend over backward to be fair” to Romney, but that “none of it helped.”
President Barack Obama is expected to hammer Romney’s tax plan during a campaign address in Ohio later Wednesday, based off the report. Here are the prepared excerpts, via the campaign:
“Just today, an independent, non-partisan organisation ran all the numbers. And they found that if Governor Romney wants to keep his word and pay for his plan, he’d have to cut tax breaks that middle-class families depend on to pay for your home, or your health care, or send your kids to college.
“That means the average middle-class family with children would be hit with a tax increase of more than $2,000. But here’s the thing – he’s not asking you to contribute more to pay down the deficit, or to invest in our kids’ education. He’s asking you to pay more so that people like him can get a tax cut.”
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.