Let's start with a quick four-step recap of Romney's tax plan. First, he extends all of the Bush tax cuts. Second, he cuts income tax rates an additional 20 percent. Third, he undoes the tax hikes and credits from Obamacare and the stimulus. Finally, he eliminates the capital gains tax for all but the richest households. The first three parts of this plan shower high-earners with most of the money. The last part is a bit of a fig leaf for the rest of us. After all, the top 0.1% of households earn half of all capital gains . Exempting middle-class households from this tax certainly helps them, but there's just not that much money there.

There are two important numbers to keep in mind when it comes to Romney's tax plan: $480 billion and $900 billion. The former is how much the nonpartisan Tax Policy Center reckons his plan would add to the deficit in 2015 alone in a world where the Bush tax cuts continue; the latter is the same for a world where the Bush tax cuts expire. Since Romney has pledged that his plan will be revenue neutral over the current baseline -- that is, with the Bush tax cuts -- that leaves him with a $480 billion hole to fill by closing loopholes or cutting spending.





Which brings us back to Romney's recent run-in with a hot mic. During a more candid moment at a fundraising event, reporters overheard Romney lay out at least two loopholes he would consider closing: the mortgage interest deduction on second homes for high-earners and state income and property tax deductions. Let's consider these in turn.





first homes, let alone second homes, is bad policy. For one, it incentivizes people to take on more debt. For another, it's doubly regressive. Not only do the rich get bigger deductions due to their higher brackets, but they also have bigger mortgages to deduct. Getting rid of this loophole is a potential cash cow that would go a long way towards making our tax code saner. Unfortunately, Romney only wants to close it for a small sliver of a small sliver of buyers. According to The mortgage-deduction on second homes is about the lowest of low-hanging fruit when it comes to tax reform. Everybody agrees that the mortgage deduction onlet alone second homes, is bad policy. For one, it incentivizes people to take on more debt. For another, it's doubly regressive. Not only do the rich get bigger deductions due to their higher brackets, but they also have bigger mortgages to deduct. Getting rid of this loophole is a potential cash cow that would go a long way towards making our tax code saner. Unfortunately, Romney only wants to close it for a small sliver of a small sliver of buyers. According to Loren Adler of the Bipartisan Policy Center, Romney's proposal would only raise about $15 billion over 10 years. In other words, about a third of the revenue the Buffett Rule would generate in a world where the Bush tax cuts for high-earners expire





There is real money, though, in Romney's proposed end to state and local deductions. According to Chuck Marr of the left-leaning Center on Budget and Policy Priorities, axing this loophole would yield roughly $860 billion in new revenue over a decade. That deserves serious plaudits. Of course, there's a problem. Romney's tax cuts are so deep that this only fills about 20 percent of the fiscal hole he creates.





The below chart compares how much Mitt Romney's tax cuts cost versus how much his loophole-closing saves, on an annual basis. (Note: "Revenue Lost: Law" shows how much Romney's tax cuts costs if the Bush tax cuts expire; "Revenue Lost: Policy" shows how much Romney's tax cuts costs if the Bush tax cuts do not expire; "Revenue Gained: Romney" shows how much new revenue he generates from closing loopholes).