In an understated comment to a Denver radio station Tuesday, Mitt Romney suggests that one way to pay for his 20 percent cut in the tax rate is to limit itemized deductions to $17,000. For those, like himself, who itemize millions, it's a big hit.
The rich may not be as secure as they hope under a President Romney.
On Tuesday, the former Massachusetts governor said one option he is considering is to limit federal income-tax deductions to $17,000 per household.
If this option became a part of the Romney economic plan, tax analysts say, it would hit the wealthiest taxpayers the hardest, because they tend to itemize their deductions when they file their federal income taxes. Limiting deductions would also make it possible for Mr. Romney to stick to his plan not to add to the tax burden of low- and middle-income Americans.
This is not to say the wealthiest won't get some benefits. Romney still wants to reduce taxes 20 percent across the board. But his suggestion to radio station KDVR in Denver on Tuesday might well raise some howls among the well-heeled.
"You could use your charitable deduction, your home mortgage deduction, or others – your health-care deduction, and you can fill that bucket, if you will, that $17,000 bucket, that way," Romney said. "And higher-income people might have a lower number."
Although Romney did not say this was his actual plan, it is the most specific he has been on how he might pay for his proposed tax cut. The nonpartisan Tax Policy Center (TPC), a joint venture of the Urban Institute and Brookings Institution, has estimated that Romney’s tax cut would result in a loss of $500 billion in revenue for the federal government by 2015 and $5 trillion over 10 years.
“If Romney were to actually make this his plan, it would clearly raise a lot of money,” says Roberton Willams, a senior fellow at the TPC in Washington. “A lot of folks are itemizing more than $17,000 per year, including Mitt Romney, whose itemizing is in the millions.”