Willard's Adjusted Tax Plan Still Won't Work

When Willard Mitt Romney (aka Wall Street Willie) debated the president, he tried to defend his 20% tax cut plan. He said he would make sure that plan did three things:
1. Not raise taxes on the middle class.
2. Not lower taxes for the rich.
3. Remain revenue neutral (not add to the deficit).

His problem is that every organization that looked at his plan said the plan definitely would lower taxes for the rich, and either raise taxes on the middle class (by eliminating deductions) or increase the deficit -- including the bipartisan Tax Policy Center. When Willard was called on this by the president, he had no answer. Well, he has now come up with a revision to his plan. He says he will just cap deductions at $25,000 (and a family could use any deductions they wanted to use, as long as those deductions don't add up to more than $25,000).

This revision would solve one of the problems his old plan had. It would eliminate a tax rise for most of the middle class -- since it is rare that middle class voters have more than $25,000 in deductions, and the deductions they have been taking would not be eliminated. But the plan still fails in the other two aspects he said it would achieve.

As you can see in the chart above (compiled with information from the Tax Policy Center), the plan would still substantially lower taxes for the rich. Even after capping deductions at $25,000, the top 1% would see an average tax cut of $105,000, millionaires would see an average tax cut of $173,000, and the top 0.1% would see an average tax cut of $496,000. This should surprise no one, since the original goal of Willard's plan was to give the richest taxpayers (those he has dubbed the "job creators") a big tax cut.

Of course, this also means the plan would not be revenue neutral. Since the rich would still be receiving large tax cuts (and presumably the middle class would get small cuts), the government would be receiving less in tax revenues -- and that means the plan would significantly increase the already large budget deficit.

In short, Willard may have changed some of his tax cut plan's language, but it still has the same old problem. It would give the rich a big tax cut, and it would explode the deficit.