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Romney's plan looks similar to one Sen. Pat Toomey (R-Pa.) proposed last year during the failed super committee's deficit reduction talks. Harvard economist Martin Feldstein also proposed the idea recently. The advantage, both noted, is that by setting an overall cap instead of wading through each individual deduction, lawmakers could try and blunt opposition.
"Obviously if you go after any one particular feature in the tax code, it's there because a special interest put it in there and will defend it very aggressively," Toomey said in an interview today.
Toomey praised Romney for floating the idea.
"It's the logical and sensible mechanism that allows you to lower marginal rates and lowering marginal rates is the necessary pro-growth aspect of tax reform," Toomey said. "If you put a cap on the itemized deductions as a category, you allow people to choose among the individual deductions they might prefer to take and you don't go after any particular one."
Toomey acknowledged that some would pay more.
"Any time if you make any changes to the tax code and you do it in a way that's overall revenue neutral, necessarily some people are going to pay a bit more and some people are going to pay a bit less at first blush," Toomey said.
But he argued that the benefits to growth from lowering rates would be substantial, with similar tax reform plans repeatedly getting bipartisan support.
Toomey also insisted that the plans can be tweaked in various ways to make sure the rich continue to pay the same share they do now.
"Mitt Romney has been abundantly clear, he is not going to support a tax reform plan that raises taxes on the middle class, and there's no reason to doubt that," Toomey said.
It will take more, however, to convince experts that Romney's numbers add up.
The plan to cap tax benefits is "not enough to pay for the rate cuts for the rich," let alone the additional rate cuts for low and middle-income earners that he has proposed, said Roberton Williams, an Urban Institute senior fellow who is associated with the Tax Policy Center.
Williams pointed out that the Tax Policy Center had run an earlier analysis of Romney's plan and concluded it would result in a large tax cut for the rich, even if it took a more aggressive approach to reducing their tax benefits. The reason is that households that earn millions of dollars typically benefit more from reduced tax rates on investment income - which Romney has pledged to preserve - than they do from breaks such as the mortgage interest deduction.
Williams noted that Romney would have a much easier time selling his plan as mathematically possible if he said he wanted to reduce tax rates by an unspecified amount, rather than by 20 percent specifically.
So far, the Romney campaign continues to insist that a 20 percent across-the-board cut is achievable, but has not provided any arithmetic of its own to show how that is possible, referring instead to friendly analyses by the American Enterprise Institute and others.
The AEI analysis, however, relied on the possibility of higher growth projections to argue that it's possible the rich wouldn't benefit.
That interpretation wouldn't pass muster with official, nonpartisan Congressional budget scorekeepers, however.comments powered by Disqus