In an effort to shift the focus of the GOP presidential race back to economics, Republican candidate Mitt Romney on Wednesday offered a new version of his tax reform plan that would offer deep tax cuts to both individuals and corporations.
Romney’s plan would drastically reduce both the corporate and individual tax rates, according to campaign economic adviser Glenn Hubbard. The plan would slash the individual tax rate from 35 percent to a permanent cap of 28 percent and would reduce corporate rates from 35 to 25 percent. It would also do away with the alternative minimum tax, cut the estate tax, and freeze the current 15 percent rate on capital gains for all individuals making more than $200,000 a year.
The proposal represents an updated and more specific tax plan than the one the former Massachusetts governor released in the fall. The original, 160-page plan called for eliminating the estate tax and lowering the corporate tax rate, but it left vague the question of lowering individual tax rates.
Romney released his new plan just hours after the Obama administration unveiled a very different approach to corporate tax reform. Romney’s plan relies heavily on increasing the corporate base by crafting the tax code to attract more business activity in the United States and would rely heavily on spending cuts elsewhere in the budget to offset the steep cost of slashing tax rates across the board.
Hubbard said that the plan would remain deficit-neutral through spending cuts and limitations on tax deductions, exemptions, and other benefits for most earners. The plan is in line with Romney’s recent promise to ensure that high-income earners maintain their burden in the tax code.
At a campaign event on Wednesday at the Tri-City Christian Academy in Chandler, Ariz., Romney vowed to “make sure the top 1 percent keeps paying the current share they’re paying or more.”
But campaign officials did not provide an exact breakdown on what spending cuts would be in order to accommodate the drastically reduced rates. Hubbard told reporters that “a very large chunk” of the budget offsets would come from base-broadening and “from increased activity in the U.S. and increased foreign investment as we become a lower-tax country.”
Nancy Cook contributed