Study puts Romney tax plan in qustion | Concord Monitor

Repealing all itemized deductions in the U.S. tax code would pay for only a 4 percent cut in income tax rates, according to an estimate from the nonpartisan scorekeeper for Congress that casts doubt on Republicans' ability to finance lower income-tax rates with base broadening.

The analysis by the Joint Committee on Taxation shows the arithmetical difficulty of an approach that assumes long-favored tax breaks such as deductions for mortgage interest and charitable contributions could be repealed instantly and completely. Republican presidential nominee Mitt Romney proposes a 20 percent income tax cut and says he would pay for it by limiting tax deductions, credits and exemptions.

There are some important differences between Romney's approach and the JCT analysis that make it difficult to compare the 4 percent finding in the study with Romney's promise of a 20 percent tax cut. Much of the base broadening in the analysis pays for some changes that Romney assumes in his starting point and for policies from the 2009 stimulus law that he may not want to extend. That means he would be able to use the changes to deductions to cut rates by more than 4 percent.

"This JCT study is but one analysis of one hypothetical tax reform option," Antonia Ferrier, a spokeswoman for Sen. Orrin Hatch, the top Republican on the Senate Finance Committee, said in an emailed statement. "Those who seek to use the study to kill tax reform efforts should be accountable for the defects of the current system."

The estimate also assumes that the George W. Bush-era tax cuts would expire Dec. 31 for all income levels, meaning that the starting point for the analysis presumes a tax increase that neither party supports. Thus, the top rate achieved under the analysis would be 38.02 percent.

In the approach in the JCT analysis, the base broadening also pays for repealing the alternative minimum tax and extending provisions of the child tax credit and earned income tax credit. The approach assumes that capital gains would be taxed as ordinary income, which under some analyses might actually cost the government money.

The estimates are contained in an Oct. 11 letter from the Joint Committee on Taxation to Hatch of Utah and Sen. Max Baucus of Montana, the Democratic chairman of the Senate Finance Committee. The letter was obtained by Bloomberg News.

Thomas Barthold of the Joint Committee on Taxation described the estimate as an "experiment" that his staff conducted and said it doesn't represent all of the possible broadening of the tax base.

Under this approach, many tax breaks wouldn't be affected, including the exclusion of employer-sponsored health insurance, the earned income tax credit and the child tax credit.

"There are a significant number of other identified individual income tax expenditures or other possible base-broadening policies that I did not include in this experiment," Barthold wrote.

The report includes a set of tables that estimate how the combination of tax-policy changes, including taxing capital gains as ordinary income rather than at preferential rates, would affect taxpayers in different income levels.

In 2015, taxpayers making between $75,000 and $100,000 a year would see their federal taxes reduced by 0.8 percent. Taxpayers making more than $1 million would pay 5.7 percent more than they would otherwise.

Source: http://www.concordmonitor.com/article/361043/study-puts-romney-tax-plan-in-qustion

empty nest nbc sports bengals vs texans nfl playoffs cincinnati bengals bengals the stand