Deduction Cap Won’t Pay For Romney’s Tax Cuts: Nonpartisan Study

Source: TPM

The one specific idea Mitt Romney has floated to pay for his nearly $5 trillion in proposed tax cuts would cover only a fraction of the cost, according to a new nonpartisan study released Wednesday.

Capping itemized deductions available to taxpayers at $17,000 — which Romney has mentioned as one possible way to make his plan revenue-neutral — would raise just $1.7 trillion over 10 years, according to the Tax Policy Center. TPC averred that his lack of specifics in other areas makes its analysis imperfect.

But based on the details he has offered, the deduction cap idea would leave a $3.3 trillion shortfall in the budget if he follows through on a promise to reduce income tax rates 20 percent below Bush-era levels, cut corporate taxes, and repeal the estate tax, Alternative Minimum Tax and taxes in the Affordable Care Act. TPC assumes optimistically, for the purposes of its analysis, that the reforms would create the same amount of economic growth as one of Romney’s top advisers forecasts.

“It’s safe to conclude that Romney would have to do a lot more than just cap deductions to make his plan revenue neutral,” TPC senior fellow Roberton Williams, the author of the report, told TPM.

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