On Wednesday, we took a look at how a $25,000 cap on itemized deductions would affect how Mitt Romney’s income tax cuts break down. But as the Brookings Institution’s Adam Looney pointed out in an e-mail to me, that’s not the full story.
Romney is also proposing to junk the Alternative Minimum Tax, to cut the corporate income tax and – most pertinent to lower- and middle-income Americans — to let the stimulus’s expansion of the Earned Income Tax Credit and other credits targeted at working families expire. By contrast, the White House budget for fiscal year 2013 proposed making those expansions permanent, which House Democrats have also been pushing. Cumulatively, this means that the GOP presidential nominee’s plan, if you loop in the $25,000 cap, would actually raise taxes on many Americans:
The poorest Americans would see their tax bills rise by nearly 2 percent of their income. But the richest would get tax cuts of over 6 percent. As has been said many times, the plan still doesn’t add up revenue-wise, meaning that capping deductions and eliminating those tax credits would not make up for the cost of Romney’s proposed income tax cuts. Now, these tax credits were part of the stimulus package, and Romney could fairly argue that they’ve served their purpose and should expire. But the end result is that many Americans would pay more next year, under Romney’s plan, than they did this year, or would under President Obama’s budget plan.