Close Close

Financial Planning > Tax Planning > Tax Deductions

Romney Calls for 20% Income Tax Cuts

Your article was successfully shared with the contacts you provided.

MESA, Ariz. (AP) — Republican presidential hopeful Mitt Romney on Wednesday called for 20 percent across-the-board cuts in personal income tax rates as part of a program to help the economy grow.

Under the proposal, the top tax rate would drop from 35 percent to 28 percent, and some popular breaks would be scaled back for upper-income taxpayers, although aides provided scant details.

“We want middle-income Americans to be the place we focus our help, because it’s middle-income Americans that have been hurt by this Obama economy,” Romney said as he outlined parts of his plan in a campaign appearance in Arizona, one of two states holding a primary Tuesday. Michigan is the other.

Romney did not propose cutting marginal tax rates in a book-length jobs plan he released last year. Now facing a challenge from rival Rick Santorum, Romney is working to court conservative voters who have been reluctant to embrace his candidacy.

Romney’s proposal sharpened his differences with President Barack Obama, who favors allowing tax cuts enacted under President George W. Bush to expire on higher incomes.

Romney also proposed changes to raise the Social Security retirement age for younger workers and curtail annual benefit increases. He would also allow younger workers to choose a voucher to pay for private insurance instead of participating in traditional Medicare.

Romney said he plans to pay for the tax cuts by limiting some of the popular deductions and exemptions for charitable giving, savings, mortgage interest and other areas. Campaign officials would not explain what deductions and exemptions Romney would limit or who would be affected, though they said the changes will be targeted at the wealthiest households.

Romney said his plan would not raise the federal deficit because economic growth and more tax revenue from ending deductions and exemptions would pay for it. His aides didn’t offer specifics.

“For high-income folks, we’re going to cut back on that so we make sure that the top 1 percent keeps paying the share that they’re paying or more,” Romney said.

Romney also cast the proposal as a boon to small-business owners who pay individual rates on their earnings.

“By lowering those marginal rates, we help businesses that pay at the individual tax rate to have more money so they can hire more people,” he said.

Obama’s campaign said Romney’s plan was a boon for the wealthiest. “He’s giving more tax breaks to millionaires and billionaires, raising defense spending to an arbitrarily high level, and lowering corporate taxes without explaining how he would pay for them,” spokesman Ben LaBolt said in a statement.

Romney’s proposals are an expansion on what he laid out in his campaign book, “No Apology,” and on a 59-point jobs plan he outlined in September.

In that plan, Romney said he opposed raising taxes and would not allow tax cuts passed under Bush to expire. Ending those cuts would make the top tax rate 39.6 percent.

Romney originally planned to unveil his economic plan in a major economic speech in Detroit on Friday, set to happen at Ford Field, where the Detroit Lions play football. His campaign said he decided to unveil the plan earlier because he wants to focus on it during Wednesday night’s GOP debate.

Obama also unveiled a corporate tax plan Wednesday, one calling for a 28 percent tax. White House spokesman Jay Carney said the timing was not planned to preempt Romney’s announcement.

Romney, who released much of his corporate tax plan last year, would lower it to 20 percent. He says economic growth would make the plan revenue neutral.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.