Romney’s Tax Proposal Targets Higher Income Earners
(WASHINGTON) -- New details of Mitt Romney's plan to offset his proposed 20 percent across-the-board income tax cuts show that the loopholes he plans to eliminate would have the greatest impact on mid-to-high-income Americans.
The presumptive GOP nominee, who has been critcized for planning to add a car elevator to his already $14 million vacation home, told supporters at a closed-door fundraiser on Sunday that he would "probably eliminate" the tax deduction for mortgage interest on a second home for "high-income people," a deduction that already primarily benefits people earning more than $100,000.
The most recent data available shows that in 2009, the majority -- 70 percent -- of the tax break for mortgage income on both first and second homes went to people earning more than $100,000 per year, according to a Congressional Research Service tax expenditures report.
"I'm going to limit certain deductions and exemptions for high income individuals so that even as we lower the rates for all Americans we're not going to shift the burden from -- middle income people to higher income people," Romney said on Monday, in response to questions about the earlier remarks in an exclusive interview with ABC's Diane Sawyer.
Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center, said eliminating the tax break will raise taxes primarily on upper middle class families, those earning between $100,000 and $200,000. But it would have little effect on the very wealthy, Williams said, because "really wealthy" people are more likely to pay for more of their homes outright, rather than take out a large mortgage.
"You're trying to figure out ways to pare back deductions without hitting people who really need them," Williams said. "The second home limit would be the same kind of thing that goes after people well enough off to have a second place."
And while the mortgage interest deduction is one of the largest deductions in the tax code -- costing the government about $94 billion in 2011 -- eliminating the tax break only for second homes is unlikely to bring in much revenue, Williams said.
"Relatively few people own these," he said, noting that an exact dollar estimate is not available because "we just don't really know" how many homeowners would be affected.
Romney floated the proposal in a speech at a closed-door fundraiser on Sunday, which was overheard and reported by NBC and Wall Street Journal reporters on the sidewalk outside the Palm Beach, Fla., event.
He also said he plans to cut the tax deduction for property taxes and state income tax, as well as reduce the size of the Department of Education and eliminate the Department of Housing and Urban Development.
But on Monday, Romney backed away from those proposals, painting them as options, not hard-and-fast policies.
"I'm not proposing any eliminations at this point," Romney told Sawyer, adding that he will first have to "do a great deal of analysis to see which agencies could be combined."
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