If implemented, US presidential hopeful Mitt Romney's tax plans would shrink tax revenues and increase the federal deficit, according to an analysis of his proposals by a non-partisan think tank.
According to the Tax Policy Center, by permanently extending the temporary tax cuts legislated under the George W. Bush administration, cutting corporate tax and rescinding certain levies enacted as part of President Obama's health care reform bill, Romney's plans would cut tax revenues by USD600bn by 2015.
As well as permanently extending all the 2001 and 2003 tax cuts now scheduled to expire in 2013, Romney has proposed in his tax plan to continue to “patch” the alternative minimum tax, and repeal estate duty. He would also eliminate taxes on dividends, interest and capital gains for taxpayers with annual income below USD200,000 per year. However, tax provisions in the 2009 stimulus act and subsequently extended through 2012 would expire. These include the American Opportunity tax credit for higher education, the expanded refundability of the child credit, and the expansion of the earned income tax credit.
Corporate tax would also be reduced from 35% to 25% under Romney's plan, and, in tandem with a "conservative overhaul of the tax system over the long-term that includes lower, flatter rates on a broader base", he would seek to pursue a transition from a 'worldwide' to a 'territorial' system for corporate taxation.
In order to cut government spending, Romney has proposed to cut all non-security related outlays by 5%, reform the Medicaid system, curb the government workforce by 10% through attrition, and carry out a "fundamental restructuring" of government programmes and services. He is also in favour of a 20% of GDP cap on total government spending.
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