Taxes Are Certain, But What About Romney's Cuts? | WAMU 88.5 - American University Radio

Taxes Are Certain, But What About Romney's Cuts?

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Republican Mitt Romney started his campaign calling for big tax cuts, but now he has changed course. He's warning middle-class families not to raise their hopes too high.

Romney couldn't have been more emphatic than he was last November at a candidates' debate in Michigan.

"What I want to do is help the people who've been hurt the most, and that's the middle class," he said. "And so what I do is focus a substantial tax break on middle-income Americans."

He put a middle-class tax cut at the top of his priority list: a 20 percent reduction in tax rates across the board.

"Right now, let's get the job done first that has to be done immediately. Let's lower the tax rates on middle-income Americans," he said.

Then, at a debate in Tampa this January, Romney got a little more specific.

"The real question people are gonna ask is, who's going to help the American people at a time when folks are having real tough times? And that's why I've put forward a plan to eliminate the tax on savings for middle-income Americans," he said. "Anyone making under $200,000 a year, I would eliminate the tax on interest, dividends and capital gains."

Shaking Up Tax Plans

But then came Romney's victory in the primaries, and a new set of goals to meet.

"Well, I think you hit a reset button for the fall campaign. Everything changes," campaign adviser Eric Fehrnstrom said on CNN. "It's almost like an Etch A Sketch. You can kind of shake it up, and we start all over again."

Romney shook up his plans on the tax cuts. He still wanted to lower the tax rates, but now he was more emphatic about the need for tax changes to be revenue-neutral.

In September, he had words of caution for the crowd that filled the gym at a suburban Ohio high school.

"By the way, don't be expecting a huge cut in taxes, because I'm also going to lower deductions and exemptions," he said.

In other words, your tax rate might be lower, but your taxable income might be higher. He elaborated in the Wednesday night debate with President Obama.

"I will not, under any circumstances, raise taxes on middle-income families. I will lower taxes on middle-income families," he said.

But he avoided details. He said he would work with Congress, and he quickly moved to talk about another goal: lowering the tax rate for small-business people.

"If we lower that rate, they will be able to hire more people. For me, this is about jobs," he said.

Will The Tax Cut Stick?

As the campaign goes on, Romney gives the tax cuts more and more to do: Help the middle class, produce more jobs, keep the same amount of money flowing into the government, and more.

At the conservative think tank American Enterprise Institute, research fellow Michael Strain says Romney has plenty of tax variables he can adjust.

"There are a lot of different levers to pull here. You have the marginal tax rates, you have the amount of income that's subject to taxation, you have the amount of income that you can deduct from your gross income to calculate your taxable income," Strain says.

Is a middle-class tax cut possible with everything else? Strain thinks it is.

"In order to do that, you would have to have a specific plan. And we haven't seen that from Gov. Romney yet," he says.

But at the nonpartisan Tax Policy Center, co-director William Gale says Romney is caught in a bind.

"He has made a set of proposals that are jointly impossible to fulfill. And so something has to give," he says.

It may be that what's giving — as Romney told the crowd in Ohio — is the middle-class tax cut.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

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