Mitt Romney's 'timid' tax plan

@CNNMoney January 5, 2012: 4:40 PM ET
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Mitt Romney's tax plan would likely bring in more revenue than that of his rivals.

NEW YORK (CNNMoney) -- If Republican primary voters are inclined to reward candidates who have big, bold, game-changing plans for the tax code, Mitt Romney might be in trouble.

Compared to the ideas pushed by other White House hopefuls this cycle -- particularly Newt Gingrich -- Romney's plan is just not that aggressive.

Of course, Romney's plan is still firmly rooted in mainstream Republican thought, and that means big tax cuts and a corresponding reduction in federal revenue.

If the Bush tax cuts remain in place -- something Romney favors -- the federal government would bring in $180 billion less in 2015 under Romney's plan, according to an analysis conducted by the Tax Policy Center, a group of tax experts who have already examined the plans of Gingrich and Rick Perry.

The rich would see the most benefit, with individuals in the top 1% receiving a tax cut of more than $80,000, while the average person would get a little more than $1,000 break.

"In many ways, Romney's tax plank is a fairly mainstream Republican offering," Howard Gleckman of TPC said in a blog post. The plan, he said, contains "no major tax reform."

Romney would leave marginal tax rates on income at their current levels, while eliminating taxes on interest, dividends and capital gains for taxpayers who make less than $200,000.

The Romney plan also calls for the elimination of the estate tax, and a reduction in the tax rate paid by corporations from 35% to 25%.

Other candidates have gone further.

"It's timid, at least by standards of Republican primary plans," said Daniel Mitchell, a senior fellow at the Cato Institute. "From the perspective of the average primary voter, he is probably just trimming around the edges."

Romney has not proposed a flat tax like Gingrich or Perry, and the front-runner has also shied away from the retail sales tax that was the centerpiece of Herman Cain's now famous 9-9-9 plan.

The Tax Foundation, a think tank that generally advocates for lower tax rates, has said that Romney's plan for the individual code "really takes no step toward fundamental reform."

In fact, Romney is the lone Republican candidate who has not proposed modifying current tax brackets or substantially reducing income tax rates. Instead, he has articulated only a vague promise to pursue a future plan with "lower, flatter rates on a broader base."

Even President Obama's fiscal commission, which won plaudits from both sides of the aisle, planned to lower individual rates across the board while eliminating special deductions and loopholes. Under that plan, the top rate paid by individuals would have dropped from 35% to 23%.

On corporate taxes, Romney favors higher rates than his competitors. Romney's 25% proposed rate carries a less aggressive reduction than that of Gingrich (12.5%), Perry (20%), Rick Santorum (17.5%) or Ron Paul (15%).

America's Choice 2012

Andrea Saul, a spokeswoman for the campaign, said Romney's economic policies are a "blueprint for governing that includes dramatic spending cuts to reduce the deficit and pro-growth tax policies."

Grover Norquist, head of the anti-tax advocacy group Americans for Tax Reform, said late last year that Romney's plan was "fine" but noted that he was falling behind his rivals.

"I think Romney put his plan in very early, Norquist said on Meet the Press, and he "needs to update it to catch up with where the debate's going,"

But after capturing the Iowa caucuses, Romney might not need to change or explain his tax policies in more detail.

"If you're the front-runner, then there are a lot of incentives to just run out the clock," Mitchell said. To top of page

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