Romney tax plan would eat into popular breaks: study

WASHINGTON Wed Jul 11, 2012 2:38am IST

Ann Romney (L-R) holds the hand of her husband, U.S. Republican presidential candidate and former Massachusetts Governor Mitt Romney, as he puts his arm around one of his grandchildren while walking alongside Senator Kelly Ayotte (R-NH) as they take part in the Wolfeboro Fourth of July Parade in Wolfeboro, New Hampshire July 4, 2012. REUTERS/Jessica Rinaldi

Ann Romney (L-R) holds the hand of her husband, U.S. Republican presidential candidate and former Massachusetts Governor Mitt Romney, as he puts his arm around one of his grandchildren while walking alongside Senator Kelly Ayotte (R-NH) as they take part in the Wolfeboro Fourth of July Parade in Wolfeboro, New Hampshire July 4, 2012.

Credit: Reuters/Jessica Rinaldi

WASHINGTON (Reuters) - Republican presidential candidate Mitt Romney's pitch to slash taxes by 20 percent across-the-board would require cuts of about $320 billion in popular tax breaks to avoid adding to the deficit, a nonpartisan analysis said on Tuesday.

The report by the Tax Policy Center found that to pare tax rates to the level promised by Romney, a third of the $1.1 trillion in so-called federal tax expenditures would have to be axed to prevent the federal budget deficit from growing.

The budget is a key point of political contention this election year. During fiscal 2011, which ended September 30, it totaled $1.296 trillion.

"It won't be impossible to pay for substantial rate reductions by cutting tax expenditures, but it will be very hard," Tax Policy Center fellow Howard Gleckman said of the study.

Popular tax expenditures include deductions for home mortgage interest and individual retirement accounts.

President Barack Obama, who will face Romney in an expected tight election on November 6, revived the tax debate this week by calling again for extending cuts that expire at year's end - but not for households earning more than $250,000 a year.

Obama has blasted Romney's tax plan for disproportionately benefiting the wealthy.

A Romney spokeswoman said the Tax Policy Center's analysis proves Romney's plan to lower rates as part of a "deficit-neutral" tax reform can be achieved.

"This study is independent confirmation that even employing an economic model that ignores the pro-growth effects of reducing tax rates, these goals can be met," spokeswoman Amanda Henneberg said.

Romney's tax proposal also includes cutting some taxes on investment income and eliminating taxes on estates passed on to heirs.

He has not spelled out how he would lower marginal tax rates, but has said broadly he would cut some tax benefits for the wealthy.

(Reporting by Kim Dixon; Editing by Xavier Briand)