By Bernie Becker - 08/08/13 07:06 PM EDT
GOP lawmakers have passed a plan similar to the one scored by the Tax Policy Center in their recent budgets, but have said they would also eliminate or roll back tax preferences to offset the cost of their rate cuts.
The nonpartisan Joint Committee on Taxation, in a projection released by Rep. Sandy Levin (D-Mich.), said last week that sort of plan would require scrapping around $5 trillion in tax incentives over a decade. Around $3.8 trillion worth of offsets would be required to offset the changes in the individual tax system.
Howard Gleckman of the tax center said the JCT projection and the TPC analysis underscore the challenge in such an aggressive tax reform plan.
“True, Congress could generate the $3.8 trillion in revenue it needs by slashing tax preferences,” Gleckman wrote. “But since tax expenditures amount to about $1.4 trillion-a-year, popular preferences would have to be cut to the bone to fund a $3.8 trillion tax cut. We’re not talking about loopholes anymore.”
Gleckman added that such a plan would be made even harder if lawmakers are trying to keep the current progressivity in the code — something top tax writers in both parties have said they're striving to do.
“Trouble is, many tax breaks benefit low- and middle-income households, not the rich who’d be big winners from the rate cuts,” Gleckman said. “For instance, the biggest beneficiaries of popular tax preferences such as the mortgage deduction and the exclusion of retirement savings and employer-provided health insurance are middle-and upper-middle income households, not the very rich.”
The Tax Policy Center played a key role in the 2012 presidential election, with an analysis that said that GOP nominee Mitt Romney’s tax plan would shift the burden away from the wealthiest taxpayers and more on to the middle and lower class.
Romney called that study “garbage.”