WASHINGTON, Oct 17 (Reuters) – Mitt Romney’s proposed cap on
itemizing tax deductions could not on its own raise enough new
government tax revenue to compensate for revenues lost by the
Republican presidential candidate’s plan to slash income tax
rates, a think tank said on Wednesday.
The Tax Policy Center, a nonpartisan group that has weighed
in on other Romney proposals, said his deductions cap could
raise up to $1.7 trillion over 10 years. The center said earlier
this year Romney’s 20-percent tax rate cut would cost $4.8
trillion.
The former Massachusetts governor has argued that his plan
will not cost $4.8 trillion. At a debate on Tuesday with
Democratic President Barack Obama, Romney reiterated that he
would pay for his tax cut proposal by capping tax deductions by
a set dollar amount. Taxpayers could choose their deductions
under the cap, such as the home mortgage interest and charitable
donation write-offs, among others, he said.
“I’m going to bring rates down across the board for
everybody, but I’m going to limit deductions and exemptions and
credits, particularly for people at the high end,” Romney said
at the debate in Hempstead, New York.
The Tax Policy Center acknowledged its latest estimates were
based on an incomplete picture of Romney’s tax plan.
“The Tax Policy Center has again inserted their own
assumptions in order to reach a biased conclusion,” a Romney
campaign spokeswoman said on Wednesday.
The Romney campaign had previously criticized the Tax Policy
Center’s estimates, saying they did not account for economic
growth that can pay for tax cuts and that the center excluded
some tax breaks in their studies.
The campaign has said the limit on itemized deductions would
be only part of its plan to fund the rate cut. For instance, it
would also revamp the tax treatment of healthcare, which now
comes in the form of an exclusion when health insurance is
workplace-based.
Romney has shifted the dollar amount taxpayers might be able
to deduct. “I’ll pick a number – $25,000 of deductions and
credits, and you can decide which ones to use,” he said.
Romney earlier this month floated a cap on deductions set at
$17,000. His campaign later said that proposal is one of a range
of options. Romney has also said $50,000 could serve as the cap.
The higher the cap, the less money Romney’s tax plan could
raise to offset tax rate cuts, the center’s estimates show.
A cap of $17,000 would raise $1.7 trillion over 10 years
while the $50,000 cap would raise only $760 billion. If Romney
eliminated all itemized deductions, his plan could raise $2
trillion over 10 years, the center has estimated.
Obama has called for a cap on itemized deductions of 28
percent of adjusted gross income for individuals earning more
than $200,000 a year and families earning more than $250,000.
