Mitt Romney insists that his tax cuts for ordinary Americans won't increase the deficit by a dime. How? It's partly because he plans to eliminate some tax expenditures. But it's also partly because Romney, like many Republicans, believes that tax cuts will prompt faster economic growth that will raise incomes and provide the government with higher revenue, as I explained earlier today. It's a virtuous cycle that's excluded from analyses from the Congressional Budget Office, which estimates that extending all the Bush tax cuts alone would reduce revenue by $4.6 trillion over 10 years — and Romney wants to reduce the individual rate by 20 percent on top of that, which would reduce revenue even further.
The problem is, even when you do take the economic stimulus of tax cuts into account, Romney's tax reductions still don't come close to making up for the lost revenue. The Tax Policy Center used a "dynamic scoring" model that factors in the impact of economic growth brought on by tax cuts, devised by Romney adviser and Harvard professor Greg Mankiw and Harvard's Matt Weinzierl. It's exactly the kind of analysis that Republicans have been clamoring for, and the TPC finds that Romney's individual tax cuts wouldn't come close to paying for themselves. His tax cuts for individuals would spur economic growth that would ultimately bring $53 billion more to the government. But they would still cost the government about $307 billion in revenue, according to the study.
That's why opponents of such Republican tax plans insist that they will explode the deficit, as they did under Bush. The only way to avoid this fate without additional changes would be if Romney made good on his promise to broaden the base by eliminating tax credits and other expenditures. According to the TPC, he would have to get rid of more than 56 percent of all tax expenditures to make up for that $307 billion gap, many of which would likely fall on the middle-class. For Romney to stay true to his tax plan — lowering rates, broadening the base and keeping the whole thing deficit-neutral — he would ultimately have to increase the tax burden on the middle-class and lower-income Americans, even though their individual rates would be lower.