Smart TaxesSmart Taxes

Romney would hike taxes on poor 60%

Analysis of plan says the rich would see taxes cut 15% and the middle class would see taxes fall 2.2%. The plan would increase the deficit, something the GOP candidate disputes.

By MSN Money Partner Jan 6, 2012 11:25AM

This post is by Stephen Ohlemacher of The Associated Press.


Republican Mitt Romney's tax plan would increase taxes on low-income families while cutting taxes for the middle-class and the rich, according to an independent study released Thursday.


On average, households making less than $20,000 would see their taxes increase by more than 60%, said the Tax Policy Center, a Washington research group that studied the Romney plan.

Households making between $50,000 and $75,000 would get small tax cuts, averaging 2.2%, or about $250, the study said. People making more than $1 million would get tax cuts averaging 15%, or about $146,000.


"Virtually everybody with a big income is getting a tax cut," said Roberton Williams, a senior fellow at the Tax Policy Center.


Overall, Romney's plan would reduce tax revenues by $180 billion in 2015, adding to the federal budget deficit, the study said. Romney's campaign disputes the estimate, saying tax cuts in the plan would help improve the economy, leading to more revenue. (Post continues below video.)


Fresh off a slim victory in the Iowa caucuses, Romney is the front-runner for the GOP nomination for president. His tax plan is less sweeping than those proposed by some of his rivals. He says he will push for "a fundamental redesign of our system." But initially, his plan maintains the current tax rates while cutting corporate taxes and reducing taxes on investments.


Romney's plan would cut the top corporate tax rate form 35% to 25%, eliminate investment taxes for the middle class and make permanent a massive package of tax cuts first enacted under President George W. Bush.


Romney would also repeal tax increases on the wealthy that were enacted as part of President Barack Obama's health care package. His plan, however, would allow some tax cuts enacted under Obama to expire.


The Obama tax cuts, first enacted as part of the massive economic stimulus package passed in 2009, targeted low-income families with children, including many people who don't make enough money to pay any federal income taxes. They included an expanded tax credit for college students, a more generous Earned Income Tax Credit for families with three or more children, and a more generous child tax credit for low-income families.


Like the Bush tax cuts, the Obama tax cuts are scheduled to expire at the end of the year. Romney's campaign says letting the Obama tax cuts expire doesn't amount to a tax increase.


"Mitt Romney has not proposed raising taxes. In fact, he laid out a blueprint for governing that includes dramatic spending cuts to reduce the deficit and pro-growth tax policies that permanently extend the Bush tax cuts, dramatically cut the corporate tax rate to create jobs, and deliver real tax relief to middle-income taxpayers," campaign spokeswoman Andrea Saul said.


Other GOP candidates have called for more sweeping tax plans. Former House Speaker Newt Gingrich and Texas Gov. Rick Perry have both called for versions of the flat tax, in which all income is taxed at the same rate. Former Sen. Rick Santorum of Pennsylvania has called for reducing the number of tax brackets from six to two.


Previous studies by the Tax Policy Center have found that plans by Gingrich and Perry would result in big tax cuts for the wealthy, reducing tax revenue by billions each year. The center has not yet done a comprehensive analysis of Santorum's plan, though Williams said one is planned.


The Tax Policy Center is a research group formed by two Washington think tanks, the Urban Institute and the Brookings Institution. Its researchers regularly testify before Congress on tax policy and its analyses during the 2008 presidential campaign were widely circulated.


Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


More from MSN Money:


Jan 6, 2012 3:11PM
Like the Bush tax cuts, the Obama tax cuts are scheduled to expire at the end of the year. Romney's campaign says letting the Obama tax cuts expire doesn't amount to a tax increase.


So let me get this straight, letting Obama tax cuts expire is not a tax increase, but letting the Bush tax cuts expire would have been? This is the double sided BS I get tired of hearing from Capitol Hill. Can we please vote some REAL people into office? If a candidate has the money to run commercials, that candidate is already bought and paid for.

Jan 6, 2012 2:45PM

The poor don't pay taxes. They just spend them. It is the working class that carry the load in this socialist system.

Jan 6, 2012 9:11PM
I saw Gary Johnson on this show last night.  The libertarian candidate, former NM gov....  Talkin bout the candidates should have to wear NASCAR like jumpsuits with their campaign contributors logos plastered all over em.  Not a bad idea IMO.
Jan 6, 2012 3:07PM
Same old song and dance from both of the leading candidates so far. Cut taxes for the rich that are supposed to lead to job creation...LOL the old adages here is the definition of stupidity is doing the same thing over and over and expecting different results.....While in days gone by this approach may have worked today it is a garbage proposal for one reason....Globilizat​ion. Now rich people are not bound to the US anymore. They do not give a hoot about the working man anymore. There is enough cheap labor in less fortunate countries to keep them rolling in dough and we sit on our behinds parroting the bull they have spread on tariffs. The way out is apparent. We must protect American jobs by imposing tariffs on all imports. Rebuild our manufacturing base and produce what we need here with American workers. Impose stiff penalties on any business who hires and illegal and they will stop coming. 30 years of stagnant growth in your paycheck and rising prices up the gingy should be enough for you people to see that the Republican way is only as a lackey for their rich supporters and they give less than a gnats butt about the rest of us.
Jan 6, 2012 5:28PM

Everyone has been living off of the middle class.  The poor don't pay taxes but receive lots of government freebies.  The wealthy pay taxes, but have far more deductions and credits available, not to mention that a larger percentage of their income is from dividends and capital gains, which are taxed a maximum of 15%. Therefore, the heaviest tax burden falls on the middle and upper middle class.  

It's time for our politicians put party differences aside, throw out the current tax code, and create something that isn't written by lobbyists for the various special interest groups. Why not just have a $50,000 exemption per family, then tax all income above that (including dividends and capital gains) at a flat rate of at 15%.  Tax corporations a flat 15%, too.  There should be no payroll tax cutoff, either.  I would not be opposed to a surcharge on all incomes above $1M, not because I want to punish the wealthy, but because it would barely impact their lifestyles.
Jan 6, 2012 3:46PM

this is poor journalism, Headline Romney to raise taxes 60% on the Poor"

Are you kidding me, if you make 20K a year, you pay no Federal Income tax, so 60% of nothing is still nothing. Obviously written by someone that is biased. How about stopping the sensational headlines that are totally misleading.

Jan 9, 2012 10:45AM
Stop, discontinue, eliminate the EIC program,  I do not understand how a person that does not work, lives off welfare, pays no taxes and is no more than a walking talking mattress back baby producing machine receives a tax refund.  If not to eliminate the program, make  it a maximum of two children.
Jan 9, 2012 7:48PM

The poor pay no taxes huh. To hell with income tax. A tax is a tax. I'm poor. I would like to know just how much I send to the greedy bastar*s in Washington that do absulutely no more than steal what they can to get richer and waste the rest on their pork trying to buy votes. The last time I checked, not only the federal government but state governments receive a large tax from every gallon of gas I purchase having  to drive to work. Every single item that I puchase at the grocery store has a tax that is sent to the federal government. Every single item that I purchase anywhere in this country has a tax on it that is sent to the federal government. Every utility bill, I could go on and on. If you want to know the truth if these SOB's would quit stealing and wasting money there would not even be a need for an income tax in this country. I despise the greedy scoundrels.

Jan 6, 2012 4:03PM

Half of congress is rich..That is why they wont tax the rich.

Jan 6, 2012 3:41PM
none of you genius' understand that the "poor" DONT pay taxes.  A person who earns 20k a year, or a family making less than 50k, doesnt pay taxes on anything they earn.  every dime they give uncle sam  every 2 weeks gets returned to them and depending on other credits (earned income, child, etc) they normally get a HUGE refunds... i know, cause thats where my family was last year.  My wife had our second child and i was the sole income in our household.  I made aprox. 40k  self employed (1099).  Self employed, which means i didnt pay a dime of taxes until the end of the year, and when i went to the tax man i thought i would pay... but i got like 8 grand back due to credits and a thanks for trying attitude from the gov.    if you make 20k as a single person, your taxes cant rise 60% since you dont pay any.  this report is bogus cause the math doesnt add up. 60% of negative (receiving a refund) is not a rational number for this discussion.  AAANNNDDDD if you make 20k a year, you qualify for a ton of subsidies (food stamps, sec. 8 housing vouchers, utility subsidies.  the current structure is enslaving the masses.  if you want to rise above 20k a year, you have make like 50 because the as u move from 20K to 35 or even 40K, you begin to lose subsidies and credits, so why would anyone try to work harder for 10 thousand a year, if you would lose 10k in susidies?  800 a month from sec. 8 housing voucher is a lot of dough!
Jan 8, 2012 2:27PM

Do the math.  Turbo Tax -married couple 1 child, $40,000 income, taking only deductions for EIC, Making work credit and, Child Tax Credit.  You Federal Tax liability is -$69.00.  This means you have 0 federal tax liability and you are going to get $69.00 back. 

Don't confuse Social Security & medicare with federal tax.  This remains the same regardless of income (SS 6.2%, exception 2011 SS 4.2% & Medicare is 1.45%) Your employer matches these payments to the gov.  My point is how do you give more tax breaks to a income bracket that requires no federal income tax liability. I agree that low income should not pay federal income tax, but the fed should not be paying low income families beyond zero tax.

Jan 6, 2012 7:30PM
First of all, just because you're "poor" doesn't mean you don't have a job or bring home a paycheck.  Some people are at the "poverty level" based on their income, the size of their families, etc.   So, if they are making a miniscule paycheck and they are taxed 60% of that miniscule paycheck, how much does that leave them?   Additionally, for those of you who keep sprouting off BS about how "poor" people don't pay taxes....did you forger that they pay taxes each time they buy groceries, buy gasoline, pay property taxes (if they own a home), purchase a car (if they're able), etc.   Just because you don't make enough to pay Federal income taxes doesn't mean that you don't actually pay any taxes at all.....some of you really need to get educated!!!   It gets a little tiring when I keep hearing people say that "poor" people pay no taxes!!!    Plus, not a single Republican will EVER admit that Romney and Santorum, or any other Republican candidate have a valid tax plan that will save this country!   They will listen to every lie told to them by their party and believe every word of it even when shown that they don't have all the answers!   It's amazing to me that we've gotten this far with so many people out there that will listen to lies and still vote for the same idiots that got us into this situation in the first place!!
Jan 9, 2012 7:21PM

America is in huge trouble. We seriously are.  Far too many people will quote "facts" off the internet  as truth.  Yup, I read it on a cousins uncles website, so it has to be true....  Get a grip and get real people.  FACT.  I made 19,699 last year.  FACT:  My federal tax withheld was 785.00  My SS withheld was 1212.00.  My Medicare withheld was 284.00.  My local taxes withheld was 402.00.  Of that money I got a "refund" of 69.00 and had to pay the state 12.00.  So that means even ignoring all the other deductions I still ended up paying 716.00 federal income tax for the year.  People making under 20k pay nothing in taxes huh?  ****. 


I would like to add though, please, let them raise the taxes cause if they tax me more, just a little bit more, then my student loan payments of 4k a year wont have to get paid because I would fall to far down on the pay scale and I wouldnt have to give a **** about  them.  Please.  Please raise those taxes. 

Jan 6, 2012 5:23PM
Politicians and bailed out bankers should pay a 90% tax.
Jan 6, 2012 4:21PM
I love the statement that the poor "don't pay taxes".  The poor pay sales tax, excise tax, social security tax, taxes on energy, taxes on utilities (internet, phone, electric, etc), state income, county taxes, and city taxes.  When you break down what a poor person pays in gasoline tax, for instance, it hits them much harder than the same tax on a wealthier wage earner.
Say a rich and poor person both drive a car with similar fuel economy.  They both drive the same amount, because lets face it, we all have to go to the grocery store, work, etc.  They fill up once a week and their vehicle holds 13 gallons.  There's 676 gallons used in a year.  Say gas averages 3.25 and they each pay $2197 a year.  Gasoline taxes are what, 18% (?) on average, so they each pay $395.46 in taxes.
The poor guy makes 20k a year, which means his gasonline tax is almost 2% of his salary.  The wealthy guy makes 250k a year, so he pays only 0.16% of his salary in gasoline taxes.  I don't know about you, but numbers don't lie and it looks like the poor guys is getting taxed to death relatively speaking.
Jan 6, 2012 8:28PM
It would seem that this author has a slight spin on this story. Out of curiosity,  I went to the Tax Policy Center's website and read the article that is being sourced here.  The so called 60% tax increase on the family making $20,000 is not a tax increase at all. It is simply allowing the tax credits that were expanded under the stimulus to expire so the hypothetical family won't be getting as big a chunk of free money from the real taxpayers.

Shame on MSN Money for allowing it's contributors to distort the facts and then try to hide behind another source.

Jan 6, 2012 7:52PM
If people would just sit down and take a quick look, a family, husband, wife and perhaps two children, would pay no income taxes at the current time on a $20,000 income stream of earned wages.  The standard deduction for a married couple is around $11,000 and four personal exemptions at around $3,700 each would bring taxable income to less than zero, resulting in no income tax to be paid.  However, with the welfare programs that are in effect, child tax credit, earned income credit, etc. this "taxpayer" will be allowed a "refund" of some amount.  However, I can't quite figure how this taxpayer gets a "refund" since he has paid in no income taxes.  If that's what Romney is considering doing, reducing some of the welfare payments, then I am all for it.
Jan 6, 2012 5:31PM
Asking the low income to pay? My gosh, what is the world coming to? I just got back from the grocery store and the gal in front of me used her welfare card{they don't have food stamps anymore because it is hard on their self esteem} I was waiting to pay cash for our hamburger and she bought shrimp and alaskan king crab legs. My husband and I work, maybe we are the fools.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.