Study Says Romney’s Tax Plan Would Most Benefit Wealthy Americans

Editor’s Note: In an interview with Judy Woodruff of the PBS NewsHour, William Gale discusses his new study, co-authored with Samuel Brown and Adam Looney, arguing that the rich—not the middle class—stand to benefit most from Romney’s plan.

Watch the full interview at pbs.org or read an excerpt below.

JUDY WOODRUFF: Mr. Obama again highlighted a study by the nonpartisan Tax Policy Center that concluded Romney’s proposal would provide large tax cuts to high-income households and increase the tax burdens on middle- and/or lower-income taxpayers.

But Eric Fehrnstrom, a top Romney adviser, called the report — quote — “a joke” and raised questions about its impartiality and methodology. The sharpened debate on tax fairness underscores the importance both campaigns have placed on middle-class voters.

A recent NBC News/Wall Street Journal poll gave Mr. Obama a 16-point lead on Romney when it comes to who would better look out for the middle class.

For a closer look at what exactly is in the Romney tax proposal at the heart of this political fight, we turn to Bill Gale of the Tax Policy Center. He is a co-author of the report in question. And Scott Hodge of the also nonpartisan Tax Foundation, he has a different read on the Romney plan.

And, gentlemen, we thank you both for being with us.

BILL GALE, Tax Policy Center: Thank you.

SCOTT HODGE, Tax Foundation: Thank you.

JUDY WOODRUFF: So, Bill Gale, to you first.

Just quickly, how do you respond to the Romney adviser who called this assessment a joke and he questioned its impartiality and methodology?

BILL GALE: Well, first thing, let’s be clear. That’s a shoot-the-messenger kind of answer.

If they had a substantive response to our analysis, I presume that they would make a substantive response. Last fall, when we put out analysis of the other Republican candidates’ tax options, the Romney campaign liked our analysis a lot and said very nice things about us. So it seems like their opinion of us depends on whether we’re reporting on what they do or what someone else does.

JUDY WOODRUFF: Well, Bill Gale, let me ask you what in a nutshell did the Tax Policy Center conclude about where the tax burden falls, assuming the Romney plan were enacted — tax plan?

BILL GALE: Well — thank you.

We did a very straightforward exercise. We said, Governor Romney wants to cut rates by 20 percent. He doesn’t want to raise the rate on capital gains or dividends or other saving investments. But he wants his reform to be revenue-neutral.

That means you have to raise the revenue somewhere else. We took the most optimistic way, the most progressive way to raise that revenue. And we showed that, even under those circumstances, there would be a big tax cut for high-income households and a tax increase for middle-income households.

JUDY WOODRUFF: That’s boiling it down to a great degree. But…

BILL GALE: Yes, and what I want to emphasize is it’s a matter of arithmetic. It is not some incredibly fancy calculation.

It’s simply that, if you cut tax rates for high-income households, you lose so much revenue there, that you can’t make it up by shutting down the tax exemptions that high-income tax households have.