President Obama plans to use the new report on the stump on Wednesday, with the two candidates’ tax visions expected to continue to play a large role in the current campaign.
“They found that if Gov. Romney wants to keep his word and pay for his plan, he’d have to cut tax breaks that middle-class families depend on to pay for your home, or your health care, or send your kids to college,” Obama said at an event in Ohio.
Romney’s campaign shot back, dubbing the Tax Policy effort a liberal study “calling for more tax hikes and more government spending.”
“We've been down that road before — and it's led us to 41 straight months of unemployment above 8 percent,” Ryan Williams, a spokesman for the Romney campaign, said in a statement.
Romney has not said what tax breaks he would get rid of to pay for his tax reform plan, though reporters have heard him suggest that he would be open to limiting the deduction for mortgage interest on second homes for top earners.
The Tax Policy Center study says that, in order to pull off his plan, Romney would have to make unprecedented cuts to tax credits and deductions, and make serious reductions to provisions like the mortgage interest deduction, the Earned Income Tax Credit and tax breaks for healthcare and charitable contributions.
Even if all tax expenditures for the wealthiest taxpayers were scrapped, they would still see their after-tax income increase, the report found.
Those making over $1 million a year would see a 4.1 percent increase, while taxpayers making between $200,000 and $500,000 would see a 0.8 percent bump.
But taxpayers making under the $200,000 threshold would see an average decrease of 1.2 percent in their after-tax income.
The study’s findings also underscore the difficulties policymakers face in overhauling the tax code, something both parties say they want to do.
Rep. Sandy Levin (Mich.), the top Democrat on the House Ways and Means Committee, is among the lawmakers who have noted that many of the more costly tax breaks, like the one for mortgage interest, also benefit the middle class.
Looney, one of the Tax Policy Center study’s authors, served on Obama’s Council of Economic Advisers. Gale was a member of that council under President George H.W. Bush.