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The Mitt Romney tax plan, released by the candidate yesterday (Wednesday), aims to give everyone a little something by cutting taxes across the board – but without dramatic reform.
Romney's tax plan shows a series of mild tax cuts for all income earners and corporations. The GOP hopeful's plan isn't as aggressive as his rivals, but also adds less to the federal deficit than their plans do.
Basically, there's no one standout winner – except maybe Mitt Romney.
While this middle ground could prove too timid, it could also dodge heavier criticism directed toward other candidates – and push Romney a step closer to the White House.
The Mitt Romney Tax Plan
Romney attacked President Obama's increases in taxes and spending when he released his tax plan Wednesday. He promoted his as more balanced and fair than the president's.
"The right way forward is a flatter, fairer, simpler tax system that generates the revenue we need to fund a smaller government that is restrained to its historical size," said Romney.
Here's what Romney has proposed for individual and corporate tax rates:
- Make an across-the-board 20% cut in marginal rates, including:
- Reduce the top income rate from 35% to 28%.
- Cut the lowest tax bracket rate from 10% to 8%.
- Reduce middle-bracket tax rate from 25% to 20%.
- Maintain the current 15% rate on income from qualified dividends and capital gains, except eliminate taxes on interest, dividends and capital gains for taxpayers who pay less than $200,000.
- Repeal the alternative minimum tax (AMT) for both individuals and corporations.
- Eliminate the estate tax.
- Cut corporate tax rate from 35% to 25%.
- Employ a territorial corporate tax structure.
- Enforce the R&D tax credit.
"My plan sends signals of stability to business leaders and investors around the world, conveys a process for accomplishing these goals, and draws on my leadership skills and real-world experience to integrate and implement a comprehensive economic policy," said Romney.
Romney Tax Plan Cheaper Than Others
Romney's plan won't add nearly as much to the federal deficit as some of his rivals.
A report by the Committee for a Responsible Federal Budget (CRFB) estimates the Romney tax plan would increase public debt as a percentage of gross domestic product (GDP) to 86%.
To compensate for lower revenue, Romney proposed cutting certain spending programs and benefits (like Social Security and Medicare for younger generations). He said the spending cuts would total $500 billion over the next few years.
Former House speaker Newt Gingrich, has proposed the priciest plan, followed by former Pennsylvania Senator Rick Santorum, Romney, then Rep. Ron Paul, R-TX. Both Gingrich and Santorum's plans would raise debt-to-GDP to more than 100%.
Gingrich has proposed an alternative flat tax of 15%, no more capital gains taxes, reduced corporate taxes, and private Social Security accounts. He proposed a 12.5% corporate tax rate. His tax plan would add $7 trillion to the national debt over the next decade, increasing debt-to-GDP to 114%.
Gingrich asserts his plan would create 6.6 million jobs in two years and balance the budget within four years.
Santorum also proposed huge tax cuts for both individuals and corporations, with a 17.5% corporate tax rate. His plan adds an estimated $4.5 trillion to debt over the next decade, increasing debt-to-GDP to 104%.
The CRFB said Paul's plan was the only one with deep enough spending cuts to keep the national debt from soaring. He's proposed cuts on various income taxes and Social Security benefits, at a cost of $2.5 trillion, and a corporate tax rate of only 15%. His plan could save $2.2 trillion over the next decade, lowering debt-to-GDP to 76%.
Ahead of Michigan's Feb. 28 primary election, Mitt Romney will detail his tax plan at a speech tomorrow (Friday) to the Detroit Economic Club.
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