Almost an actual proposal: Romney Specifies Deductions He’d Cut
Mitt Romney, speaking at a private fundraising event on Sunday, offered the first details of deductions he would eliminate or limit in order to offset the income tax cut he has proposed for all taxpayers.
Mr. Romney, the presumptive Republican nominee for president, said he would eliminate or limit for high-earners the mortgage interest deduction for second homes, and likely would do the same for the state income tax deduction and state property tax deduction.
He also said he would look to the Department of Education and the Department of Housing and Urban Development for budget cuts.
Mr. Romney discussed his plans while speaking to high-dollar donors at a private estate. During the backyard event, which could be heard by reporters outside on a public sidewalk, Mr. Romney offered policy specifics he has yet to unveil on the campaign trail.
Mr. Romney has pledged a 20% cut to income tax rates for taxpayers in all income brackets but has offered few details for how he would pay for the proposal. Mr. Romney also has vowed to bring federal spending under control, while offering few details on which programs he would cut.
The problem with all of these sorts of things is it is difficult to know what the impact will be at the level of the individual. Like most Americans I don’t hold a mortgage on a second home, so there is no personal impact on my family there. However, I do itemize deductions including state income and property taxes. So I hear this proposal and I immediately think “Crap. I’ll have to take the standard deduction.”
But, what would the overall impact be?
It’s hard to know exactly how the “20% cut to income tax rates for taxpayers in all income brackets” will be implemented, but right now my taxes came to 13% of taxable income. A 20% reduction in that rate would result in a 10.4% rate. However, using the standard deduction (sans the state income and property tax deductions) would raise my taxable income 3.5%.
The net result? Under Romney’s plan my family would owe $1100 less in taxes.
I could live with that.