Politics
Election 2012: A win for Obama could cost Romney $5M in personal taxes
Obama’s plan would hit couples making more than US$250,000 per year from several directions, raising their tax rate, dunning them more for investment income, and limiting their tax deductions. People like Romney with earnings from private equity management would lose a big tax break. And Obama would establish a rule, named after billionaire Warren Buffett, to ensure that households taking in more than US$1 million a year pay at least 30 percent in taxes.
Obama’s health care law, already in place, also raises Medicare taxes on the wealthy, especially big investors, starting in 2013. That could cost Romney more than US$800,000.
None of this would come close to balancing the budget, but it could add billions of dollars per year to help reduce the deficit.
Romney wants to lower current tax rates for everyone by 20 percent. This benefits the wealthy most: Dropping the highest bracket from 35 percent to 28 percent, for example, yields a much bigger savings for those at the top than lowering the 15 percent bracket to 12 percent brings for taxpayers in that group.
Romney also would eliminate the much-despised alternative minimum tax, which hits the rich and some middle-class taxpayers, too. He wants to repeal Obama’s health care law and its taxes. Romney would pair his tax cuts with huge spending reductions eventually reaching US$500 billion per year.
To help offset the government’s losses from lower rates, Romney says he would end some tax breaks. But he hasn’t said which ones, so it’s impossible to calculate the effect.
At the extreme, if Romney persuaded Congress to eliminate all itemized deductions, hard to imagine politically, that could add another US$1.3 million to what he owes under his own plan, according to Tax Foundation analyst Nick Kasprak.
