With tax reform on everyone’s mind during this year’s presidential election, Republican candidate Mitt Romney has a variety of ideas that he plans on offering regarding this important issue. Romney has stated that he is willing to consider reducing tax deductions that are currently being used by over a million families in order to assist with high mortgage interest and skyrocketing health care costs.
While Mitt Romney wishes to continue the income tax cuts for higher income individuals, he is also suggesting a plan that will incorporate a 20 percent tax rate cut across the board. President Obama is against the continuation of tax cuts for the upper income individuals, and Mr. Romney has yet to offer details of his tax overhaul plan. Romney believes that his tax reform plan would assist in the recovery of the entire US economy, regardless of income levels.
During a television interview on Monday night with Denver station KDVR, Romney explained his motives behind his tax reform idea. He stated, “As an option, you could say everybody’s going to get up to a $17,000 deduction. And you could use your charitable deduction, your home mortgage deduction, or others – your health care deduction, and you can fill that bucket, if you will, that $17,000 bucket that way. And higher income people might have a lower number.”
An adviser for Romney stated that changes in other areas, including personal tax exemptions and health care credits or deductions, would also be considered if the deductions were limited. The combination of these two areas and the limited deductions would allow for Romney to achieve his goal of keeping tax burdens the same for the wealthy and middle class. Romney states that under this specific proposal, many deductions for taxpayers will stay the same as in previous tax years.
While the topic of illegal immigrants remains a controversial subject between the two candidates, Mr. Romney stated in a local interview to the Denver Post that he would continue to honor the temporary permission that is currently being granted to younger illegal immigrants which allows them to stay in the country. Previously, Mr. Romney refused to state one way or the other if he would allow this policy to remain active if he were to win the election.
In June, Mr. Obama had announced that he would allow certain children who have been brought into the US by their illegal immigrant parents to stay in the US, preventing deportation. Requirements include a clean criminal background, serving in the US military, and/or a high school diploma. The debates, expected to draw a huge nationwide audience, take place with most polls showing Obama slightly ahead both nationally and in the battleground states expected to settle the election.
While discussing the tax issue in Denver, Romney suggested the tax that is included in the Simpson-Bowles deficit commission recommendations as a possible avenue. This particular plan calls for the reduction of top income tax rates, and in order to pay for that, the plan would eliminate or minimize certain popular tax breaks, including contributions to various charitable organizations.
While Romney was not specific on whether or not he would definitely implement any certain change, he said that he would work with Congress, and his statements were much more clear regarding his intentions for tax reform than they have been previously.
In a behind closed doors, private conversation with donors this past spring, Mr. Romney stated that he would consider the idea of completely eliminating deductions for home mortgages on second homes. While this conversation was meant to be confidential, there were reporters standing outside who overheard Mr. Romney’s statements.
The numbers are of significant importance due to the fact that Romney has stated that he will be able to successfully lower tax rates across the board while allowing reducing government revenue to stay intact. He also states that he wishes for America’s wealthy to continue to shoulder the same amount of the tax burdens that they currently have. By adjusting the tax adjustments and deductions, the numbers would definitely match up.
While many taxpayers disagree, Romney’s campaign spokeswoman Andrea Saul insists that his plan would also cut taxes for earners in the middle income brackets. Andrea Saul stated in an email: “There are a range of policy options, Gov. Romney referenced one illustrative example, to achieve these goals.” Saul failed to mention any alternative options.
It is highly probable that Mr. Romney’s tax plans will take center stage. In the past, U.S. tax law limited tax deductions and personal tax exemptions for upper income individuals, but those limits were removed under president George W. Bush as part of a mass package of tax cuts that were passed during his presidency.
If Congress does not act before next year, the tax limits are scheduled to return due to the fact that the Bush-era cuts are set to expire. The Republicans wish to extend these tax cuts while Congress continues to work on the overhaul of the Federal Tax Code, and President Obama would like to extend these tax cuts for any individual who is currently earning less than $200,000 a year, and married couples who together make less than $250,000 a year.
Romney claims that his tax reform plan would continue to generate the same amount of tax revenue as the system that is currently in place, but he states that his plan will work more efficiently by not raising taxes on any specific income group.
A nonpartisan research group, called the Tax Policy Center, states that according to their research, it is not realistically possible to reduce the tax rates of the upper income class without passing down some of their tax burden to individuals who are of middle or low income. Mitt Romney’s campaign continues to dispute claims made by the Tax Policy Center, and he also has the support of various conservative groups who are challenging these statements as well.