It was only a fleeting exchange during Saturday’s debate in Iowa, but it brought up a key difference between Mitt Romney and the rest of the GOP’s 2012 field. Concluding his first major attack on Romney during the debate, Newt Gingrich blasted Romney for refusing to eliminate the capital gains tax entirely, instead limiting it to those with less than $200,000 in taxable income. “A $200,000 limit on capital gains is worse than Obama. You need to encourage people with capital to invest,” Gingrich told him. “We need to spend our precious tax dollars on the middle class,” Romney replied.


Romney’s proposal would only effect a small number of middle-class Americans, as a reduction in the capital gains disproportionately benefits the wealthiest Americans. The Tax Policy Center estimates that about 94 percent of the benefits from low capital-gains taxes in 2013 will go to Americans with cash incomes over $200,000 — and three-fourths of the benefits will go to millionaires. That means that just 6 percent of the benefits will go to those with cash incomes below $200,000. (Romney uses a different measure of income for the $200,000 cutoff that would benefit some more households, but it would be in the ballpark of the Tax Policy Center’s numbers.)

So Romney’s position on the capital gains tax seems like a hedge, with an eye toward the general election: he can emphasize his desire to cut the tax during the GOP primary, while insulating himself a little from the charge that he’s pushing for enormous giveaways to the richest Americans. The Wall Street Journal editorial board criticized him for doing as much earlier this fall, writing that Romney’s proposal “eviscerates most of the tax cut’s economic impact and also suggests that he’s afraid of Mr. Obama’s class warfare rhetoric.”