A centerpiece of Mitt Romney's campaign for president, his plan for tax reform, revolves around a puzzling set of assertions. He says the rich will pay "the same" under his plan. He says the middle class will get "some relief." And yet he also says his tax reform won't add to federal deficits.

To lots of Americans this sounds, well, unusual. If one big chunk of taxpayers pays the same, and the other big chunk pays less, how can federal revenue stay the same?

This conundrum represents a large gray area in Romney's economic plan. Those listening to the Republican presidential candidate have rushed in to fill the void with various assumptions that may or may not prove to be correct.

Some voters reckon that Romney is implying, if anything, that he'd be willing to see a modest tax hike for upper income Americans, in order to cover the cost of modest middle-class tax relief. Others assume that, if elected, the former Massachusetts governor would be less than strict about the goal of not adding to federal deficits. Others argue that, contrary to the appearance of his rhetoric, Romney plans big tax cuts for the rich.

Some policy experts say Romney's own language offers hints that the last interpretation may be correct – and that if Romney's plan were enacted, the top 5 percent of households appear likely to reap significant gains from the changes. This could occur, potentially, even if the reforms also delivered on Romney's stated goals of middle class tax relief and not adding to federal deficits.

Roberton Williams, a finance expert at the nonpartisan Tax Policy Center, says it may be vital to consider precisely what Romney has been saying: The candidate promises to make the rich keep paying a constant percentage of all US income taxes. That's very different, Mr. Williams says, from asking the rich to pay a constant share of their own earnings in income taxes.

If incomes for the rich continue to rise faster than for the middle class – as has been the recent historical pattern – then the rich could pay a constant share of federal income taxes even as the effective tax rate on their income steadily fell over time.

"In order to properly evaluate the 'fairness' of a tax system, you have to compare tax burdens to income levels, or ability to pay," says Diane Lim Rogers, chief economist at the Concord Coalition, a group that champions fiscal responsibility. By contrast, she says via email, a focus on the "share of taxes paid" can be tricky or misleading.

Ms. Rogers says that when President Bush cut taxes, the share of income taxes paid by the rich went up, but that doesn't mean the tax code had become more progressive. "The rich were paying a larger share of a much smaller pie," she says. Even so, the rich "enjoyed the largest relative (not just absolute) decline in tax burdens" she says, so progressivity actually fell, when tax burdens are measured by income level.

Romney's proposed tax reform is very different from what occurred under Bush. Romney calls for continuing the Bush tax policies, and then cutting tax rates by an additional 20 percent. Unlike Bush, he pledges to offset the revenue loss from lower rates by closing or capping deductions and other loopholes.

Still, some critics of Romney predict that he would not be able to cut enough deductions and tax breaks for high income individuals to fully pay for the tax rate cut. The result might be big tax cuts for the high-income individuals, and a failure to keep his pledge to hold federal revenue constant over the next decade, compared with current policies.

In addition to his income-tax changes, Romney proposes ending the estate tax, another change that would heavily benefit the rich.

Others tax-policy analysts say that Romney could, potentially, meet his budget-defict objectives and still offer effective tax cuts to the rich and middle class. The key to this outcome would be if his tax reform, by lowering rates, had strong positive impacts on economic growth.

"We bring down rates to get more people working," Romney said in the first presidential debate, referring to the expectation that lower rates heighten incentives for people to work and for businesses to invest.

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If the growth effects were strong enough, the addition to gross domestic product (GDP) would mean more income for households, and hence more tax revenue. It would help to pay for his tax-rate cuts. And potentially, it might mean that middle class families became better off, even as the tax reform also helped the rich.

The contrast between Romney and President Obama can be heard in the phrases they use.



Where Romney talks about the share of taxes paid by the rich, Mr. Obama speaks of their tax liability. Obama's proposed Buffett rule calls on millionaires to pay at least 30 percent of their income in federal tax.



Obama also says Romney is offering some $5 trillion in new tax cuts. Romney says the total isn't $5 trillion, because he plans to offset the cost by curbing tax breaks. He hasn't spelled out the details, including which tax breaks would be limited to maintain the share of taxes paid by the rich.



A final point: Saying the top 5 percent pay about 60 percent of all income taxes is different from saying that's their share of personal taxes. US families also owe payroll taxes, state income tax, sales taxes, and property taxes, for instance. When all taxes are factored together, the share paid by the rich is much lower.