Romney says he’ll pay for a large chunk by scaling back or eliminating credits and deductions. Experts take aim at Mitt tax vow

Mitt Romney’s pledge to cut income tax rates by 20 percent has been a central plank in his bid for the White House throughout both the GOP primary and general election campaigns. But Americans might never see that 20 percent tax cut — even if the GOP nominee is triumphant on Election Day.

The numbers in the former Massachusetts governor’s tax proposal already have faced extensive scrutiny from nonpartisan analysts and have come under fire from critics who charge him with coddling the wealthy. Against that backdrop, Romney in recent weeks has begun emphasizing additional tax promises: Top earners won’t really see a tax cut, the middle class won’t see a penny in tax increases and the plan will pay for itself.


A 20 percent break would probably be a President Romney’s opening bid for tax reform, but some experts think he’ll ultimately have to back down and deflate that break for a smaller reduction.

It all depends on what he prioritizes — and the answer to that question remains elusive.

Romney has said he’ll pay for a large chunk of his tax cut by scaling back or eliminating credits and deductions. But studies from the nonpartisan Tax Policy Center and a recent letter from the Joint Committee on Taxation have called into question just how much revenue could be generated that way — and whether it would be anywhere near enough to finance a 20 percent cut.

Michael Strain, a research fellow at the conservative American Enterprise Institute, thinks Romney ultimately would scale back his 20 percent position during negotiations with Congress. He classifies Romney’s promises into three main planks: revenue neutrality, no tax hikes on the middle class and the 20 percent cut.

In his opinion, they’re not all possible.

Looking at Romney’s political messaging, Strain says that keeping taxes low on the middle class seems more central to Romney’s plan than the 20 percent cut. He notes that Romney never mentioned the 20 percent tax cut in the first debate — nor the second one.

“But what he has mentioned over and over again is that he’s not going to increase middle-class taxes and he’s not going to increase the deficit, so, I think, judging from their public statements — both from Gov. Romney and the campaign — it seems like, of the three, the one that’s going to give is the size of the rate reduction,” Strain said.

Strain thinks the 20 percent figure, specific though it may be, is more symbolic of Romney’s broader desire to cut rates.

Top Romney adviser Ed Gillespie seemed to be suggesting something similar on “Fox News Sunday” earlier this month.

“The 20 percent tax rate — I think that people understand that that is a broad principle, that that tax rate needs to come down and we need to broaden the base,” Gillespie told host Chris Wallace. “That’s the principle. The principle is also that we’re not going to change the share of taxes paid by upper-income earners and we’re going to give tax relief to the middle class and it’s going to be deficit neutral.”

During the second presidential debate last Tuesday, moderator Candy Crowley of CNN tried to pin down Romney on the question, asking him whether he’d back off his 20 percent rate cut proposal if the money isn’t there.

“If somehow the numbers don’t add up, would you be willing to look again at a 20 percent [cut]?” she asked.

Romney never answered the question, instead diving into a vigorous defense of his tax math.

Likewise, Romney aides contend that the 20 percent cut is entirely possible. They would not entertain the possibility that the candidate would have to consider changing his stance if he made it to the White House.

“The governor stands by his plan in its entirety,” spokeswoman Amanda Henneberg told POLITICO when asked whether Romney might be flexible on the 20 percent figure.

Still, campaign promises are often made to be broken, particularly when it comes to taxes.

President George H W. Bush famously vowed, “Read my lips, no new taxes,” during his 1988 bid for the White House. Then he signed tax hikes into law in part to reduce the federal budget deficit.

William Gale, co-director of the Tax Policy Center, notes that President Bill Clinton campaigned on a middle-class tax cut only to change his mind and tackle the deficit. And other critics charge that President Barack Obama’s health care law — with its tax on the uninsured — constitutes a middle-class tax hike, in direct contrast to his 2008 campaign pledge.

In that regard, Rudolph Penner, a former director of the Congressional Budget Office who thinks 20 percent cuts are entirely possible, questions whether Romney’s 20 percent figure will stick around.

“It might not be 20 percent, but it could be in the spirit of that,” he told POLITICO, adding that tax reform would most likely have to be accompanied by rate reductions in order to get Republicans on board. “There are so many different ways he could go with different combinations of rates.”

“Zero chance,” predicted John Buckley, former House Ways and Means Committee chief tax counsel, when asked about the likelihood of Romney fulfilling that part of his pledge.

In a letter to the editor of Tax Notes on Monday, Buckley, who is also a former JCT chief of staff, said Romney might be able to slash rates by 14 percent while maintaining the current distribution of the tax burden. But under that scenario, he argued, Democrats would have to accept a total tax revenue level of about 19 percent. Democrats tend to think it should be above 20 percent.

Buckley, who worked for the Democrats, thinks Romney might enact his tax plan at the expense of tax policies that favor the poor and the middle class. The Romney campaign, he notes, last week lauded a 2006 JCT study that found lawmakers back then could cut rates by 23 percent by repealing itemized deductions, personal exemptions, the child tax credit, mortgage interest deductions and income exclusions for health care premiums and life insurance. The study also found such a proposal would shift the tax burden from America’s affluent to the middle class and the poor.

AEI’s Strain said Romney could reduce the 20 percent cut or keep the break for only the middle class while giving top earners a mere 10 percent cut, for example. Or, if he’s determined to give everyone a 20 percent reduction, he could cut spending to help pay for the tax breaks, Strain added — though Democrats would scoff at that option.

Another possibility: Romney could throw out his promise of revenue neutrality and simply add to the deficit, though he promised he wouldn’t. The most recent Republican president, George W. Bush, took that approach, prioritizing tax cuts over deficits. But most experts think that’s unlikely considering current populist demands for fiscal restraint.

“I don’t know which part of the proposed cuts would be taken back, or whether the lack of financing of all of the cuts would simply turn into a higher deficit or less spending,” said Brookings’s Gale, when asked about what he thought Romney might do.