Mitt Romney's tax proposals include lowering marginal tax rates substantially, eliminating the alternative minimum tax (AMT) and maintaining all tax breaks for both investments and savings. More specifically, Mr. Romney proposes the following:
1.) An extension of the Bush-era tax cuts.
2.) A reduction of individual income tax rates by 20 percent.
3.) Elimination of taxation on investment income of most taxpayers including individuals earning less than $100,000 and couples earning less than $200,000
4.) Elimination of estate taxes.
5.) Reduction of the corporate tax rate.
6.) Repealing the alternative minimum tax and high-income taxes enacted in the health-reform legislation of 2010.
7.) Maintaining the provisions in the tax code that promote savings and investment. These include preferential rates on capital gains and dividends, exemption of income accrued in qualified retirement and other similar accounts, exemption of interest on state and local bonds and the exclusion of capital gains on home sales.
The authors suggest that these changes would reduce federal tax revenues by $456 billion in 2015, although the Republicans claim that by broadening the tax base and collapsing the income tax rates into two brackets (10 and 25 percent, a 20 percent drop in the top marginal rate), revenue will remain neutral.
I bet that you can't guess who would benefit the most from Mr. Romney's plan?
The authors' calculations show that taxpayers with incomes over $1 million would see their after-tax income increased by 8.3 percent with an average tax cut of about $175,000.
Taxpayers with incomes between $75,000 and $100,000 would see their incomes increase by a paltry 2.4 percent with an average tax cut of only $1,800.
Taxpayers earning less than $30,000 annually, would actually see their incomes decrease by 0.9 percent or $130 as a result of the expiration of temporary tax cuts.