The respected nonpartisan Tax Policy Center has just released the most comprehensive analysis yet of Mitt Romney’s tax plan. The most interesting finding can be seen in this chart, which breaks down how Romney’s plan would impact Americans by income.
Here’s the bottom line. When comparing how people are doing under today’s tax policies to how indivuals would do under Romney’s plan in 2015, these are the changes you’d see:
Individuals in the top 0.1 percent, or those making over $2.8 million, would get an income tax cut of nearly half a million dollars.
Individuals in the top one percent, or those making over $629,000, would get a cut of over $80,000.
Meanwhile, people in the other percentiles would see a tax reduction, but a far smaller one. Those in the 95-99 percentiles would see a tax cut of around $7,500. Those in the 90-95 percentiles would see a tax cut of around $2,500. And those in the 80-90 percentiles would see a cut of around $1,100.
Broken down by quintile, those in the fourth highest would see a tax cut of roughly $6,900; those in the third highest would see a cut of around $500; and those in the bottom two would see a slight increase.
I checked in with Tax Policy Center analyst Roberton Williams for an explanation of the methodology. In a nutshell, the analysis takes into account all the changes in Romney’s tax plan — including ones for corporations — and calculates what they would mean for individuals.
The main driver of the change on individuals, Williams tells me, is the provision in the tax plan that would cut corporate tax rates from 35 percent to 25 percent. Williams says the Tax Policy Center’s model assumes that change would most directly impact owners of capital, i.e., those who gain their income from investments in corporations and tend to be the wealthiest. That’s why the top 0.1 percent and top 1 percent see such a large tax savings relative to everyone else.
Now, there’s some debate among economists about this. Some think that corporate tax cuts could also translate into gains for workers and for people who buy whatever the corporation is selling. This is in line with the “corporations are people” argument that Romney has made.
But Williams says that even if you lean in those directions, the savings still fall very disproportionately into the pockets of the top one percent and 0.1 percent.
One other thing: The above comparison is between how people would fare under Romney’s tax plan and how people are doing now under the current Bush tax cut regime. If you compare how people would do under Romney’s plan to how they would do if we did nothing and let the Bush tax cuts expire, the findings are even more stark. The chart on that is here. Those in the top 0.1 percent would see their taxes fall by nearly $900,000. And those in the top one percent would see their taxes fall by nearly $165,000.
Oh, and one other finding: If Romney’s tax plans pass, in 2015, they would add $180 billion to the deficit — on top of the $400 billion cost of extending the Bush tax cuts — for a total deficit explosion of nearly $600 billion. And over 10 years, it would be roughly 10 times that.