Accusations Romney would raise taxes on middle class raises eyebrows

A recent ad on behalf of the Obama campaign raised some eyebrows. It accused Romney of planning to raise taxes on the middle class in order to lower taxes on the wealthy, even though the Romney plan pledged to lower everyone's rates by 20 percent.

The Priorities USA ad said in part, "Mitt Romney's budget plan will hurt the middle class:
Raising taxes on the average family by up to $2,000 while giving a tax break of $250,000 to multimillionaires. Doesn't Mitt Romney understand, we can't rebuild America by tearing down the middle class."

One might think from the ad that Romney is specifically proposing to raise middle class taxes by $2,000 -- but that is not true.

In fact, he pledged just the opposite, prompting one Romney adviser to blast any such accusations.

"That's about the biggest political lie I've ever seen in my entire academic career," Kevin Hassett, an economic adviser to the Romney campaign said. "It's absolutely not Romney's plan to do that. There's nothing about Romney's plan that would suggest that he would do that. It's just pure fiction."

Taxpayers claim $1.2 trillion in deductions every year -- everything from familiar ones, such as charitable deductions and the home mortgage interest, to hundreds of millions in more arcane deductions.

Romney pledged to lower tax rates by 20 percent for everyone -- and keep it revenue neutral.

His running mate described it this way: "Higher income people can use lots of tax shelters to shelter some of their income from taxation," Paul Ryan said. "Close those tax shelters, more of their income is subject to taxation.  That allows us to lower tax rates for everybody. ... This is a secret to economic success."

That is much like what the Bowles/Simpson Commission recommended. But Romney has been criticized for not going into detail about how he would achieve that goal and which deductions he would end -- leaving his plan open to debate.

A study by The Tax Policy Center chose the tax deductions it thought Romney would cut and others he would not and concluded he would come up short.

No one was available for an interview, but the study concluded that the Romney effort
"would provide large tax cuts to high-income households, and increase the tax burdens on middle- and or lower-income taxpayers."

"The Tax Policy Center said that it was a mathematical necessity that Governor Romney's plan would raise taxes on the middle class," Curtis Dubay of the Heritage Foundation said. "However, they chose which tax preferences were on and off the table."

Matt Jensen of the American Enterprise Institute puts it this way: "They make assumptions somewhat haphazardly about what Governor Romney would and would not be willing to cut in order to pay for the tax reform proposal."

After the uproar over the Obama ads, however, the center noted that it had excluded tax deductions on savings and investment because Romney had said he wished to spare those areas. As others pointed out possible deduction cuts, the center issued another document noting that with some changes, there is no reason, as they put it, why a reform proposal "would have to raise taxes on middle-class households."

Ads supporting Obama, of course, do not mention that.

"You can take these preferences that the Tax Policy Center ruled off the table," Dubay said, "put them back on, and show that Governor Romney's plan didn't raise tax on the middle class."

Several analysts say Romney could easily find enough cuts to give 20 percent tax cuts to all. One way is to cap the amount of tax deductions the wealthy can claim.

"If all of these tax benefits add up to over 2 percent, the biggest claim that you can take on your tax return is 2 percent of your income." Jensen said.

And several say if Romney couldn't find enough money or couldn't get Congress to go along, Romney could just offer an 18 percent cut instead of 20, or whatever fits in the plan to keep it revenue neutral.