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Tax Policy Center's Analysis of Romney's Tax Plan Inaccurate
The Tax Policy Center (TPC) released a report in March of 2012 detailing the effects of the Romney tax reform plan on taxpayers. The conclusion reached by the Tax Policy Center stated that the Romney tax reform plan would cut taxes for high-income taxpayers and raise them for middle and lower-income earners. Since the report was released, President Obama and his team have ran with it and used it to undermine the credibility of Romney’s plan.
Senior Analyst in Tax Policy at the Heritage Foundation, Curtis Dubay, released his rebuttal of the TPC report yesterday which revealed many of the flaws in the report. According to Dubay, the primary problem with the report is that the majority of it is based on assumptions and “carefully made choices”.
“The TPC report’s conclusion resulted from a series of decisions and assumptions that frame the analysis in a carefully chosen manner. The authors’ choices and assumptions, not the underlying nature of the Romney plan, led to their selected result,” said Dubay.
One of the more blatant instances of “carefully made choices” contained within the report is its claim of an $86 billion increase in taxes for middle and lower-income earners. The inflated estimate was based on the assumption that the Romney plan would include certain tax deductions and credits favoring high-income taxpayers, including exclusions of interest on life insurance savings and municipal bond interest. According to Dubay, if these tax preferences favoring high-income taxpayers had been eliminated, it would have accounted for at least a $45 billion drop from the $86 billion estimate. Furthermore, when exclusions of interest on life insurance savings and municipal bond interest are combined with the step-up error made in the TPC report, the amount is $64 billion of the $86 billion total. As for the leftover $22 billion, it would have also been eliminated if the Tax Policy Center had chosen tax preferences and policies not accounted for in the report.
Although this report may fit President Obama's agenda to frame Governor Romney as anti-middle class, it does not hold its validity when it makes claims that are based on information that is both incomplete and carefully chosen.
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