Live blog: Debate between Vice President Joe Biden and US Rep. Paul Ryan
FACT CHECK: Romney’s $5 trillion tax cut: The figure comes from an analysis of Romney’s tax plan by the nonpartisan Tax Policy Center. But it represents only part of Romney’s proposal, not the entirety.
Romney does want to cut taxes. He’d lower every American’s federal income tax rate by a fifth, reduce the corporate tax rate from 35 percent to 25 percent, eliminate the estate tax and make other cuts. The Tax Policy Center estimated Romney’s cuts would total $480 billion in 2015, or roughly $5 trillion over 10 years.
But Romney has pledged that his tax overhaul would be revenue-neutral -- that he would offset every dollar lost to cuts by closing tax loopholes and eliminating deductions, though he has not said which ones.
“And you'd think, well, then why lower the rates?” Romney said during last week’s debate. “And the reason is because small business pays that individual rate … and if we lower that rate, they will be able to hire more people.”
Romney also has promised that his loophole closures and deduction eliminations will not result in a net tax increase on the middle class. The Tax Policy Center concluded that Romney cannot accomplish both goals – revenue neutrality and protecting the middle class from tax hikes – but Princeton economist Harvey S. Rosen and others have argued that he can.
In any case, the net impact of Romney’s tax plan would not be $5 trillion because he would compensate for at least some of the revenue lost to tax cuts by closing loopholes and ending deductions. And his campaign has hinted that he would consider more modest cuts if it became clear that his original proposal would not be revenue neutral or would hit the middle class.