n $5 Trillion Tax Cut
The president said Romney was proposing a $5 trillion tax cut and Romney said he wasn't. The president is off base here — Romney says his rate cuts and tax eliminations would be offset and the deficit wouldn't increase.
Obama: Governor Romney's central economic plan calls for a $5 trillion tax cut — on top of the extension of the Bush tax cuts.
Romney: First of all, I don't have a $5 trillion tax cut. I don't have a tax cut of a scale that you're talking about.
To be clear, Romney has proposed cutting personal federal income tax rates across the board by 20 percent, in addition to extending the tax cuts enacted early in the Bush administration. He also proposes to eliminate the estate tax permanently, repeal the Alternative Minimum Tax, and eliminate taxes on interest, capital gains and dividends for taxpayers making under $200,000 a year in adjusted gross income.
By themselves, those cuts would, according to the nonpartisan Tax Policy Center, lower federal tax liability by "about $480 billion in calendar year 2015" compared with current tax policy, with Bush cuts left in place. The Obama campaign has extrapolated that figure out over 10 years, coming up with a $5 trillion figure over a decade.
However, Romney always has said he planned to offset that massive cut with equally massive reductions in tax preferences to broaden the tax base, thus losing no revenue and not increasing the deficit. So to that extent, the president is incorrect: Romney is not proposing a $5 trillion reduction in taxes.
The Impossible Plan
However, Romney continued to struggle to explain how he could possibly offset such a large loss of revenue without shifting the burden away from upper-income taxpayers, who benefit disproportionately from across-the-board rate cuts and especially from elimination of the estate tax (which falls only on estates exceeding $5.1 million left by any who die this year). The Tax Policy Center concluded earlier this year that it wasn't mathematically possible for a plan such as Romney's to cut rates as he promised without either favoring the wealthy or increasing the federal deficit.
Except for saying that his plan would bring in the same amount of money "when you account for growth," Romney offered no new explanation for how he might accomplish all he's promised. He just repeated those promises in some of the strongest terms yet.
Romney: My number one principal is, there will be no tax cut that adds to the deficit. "¦ I will not reduce the taxes paid by high-income Americans. "¦ I will lower taxes on middle-income families.
But he didn't say how he'd pull off all those things at once.