From the New York Times:
Mr. Romney’s top economic adviser, Glenn Hubbard, said the plan would cut all six current tax brackets – 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent, depending on a taxpayer’s income – by the same proportion of 20 percent. That would produce this new set of tax brackets: 8 percent, 12 percent, 20 percent, 22.4 percent, 26.4 percent, and 28 percent. “It’s a marginal rate cut for every American,” Mr. Hubbard said.
How does Romney intend to pay for those cuts? From his campaign (bold mine):
Government cannot continue to increase irresponsibly the size of annual deficits. Stronger economic growth and reductions in spending will help to ensure that these tax cuts do not expand deficits. In addition, higher-income Americans in particular will see limits placed on deductions, exemptions, and credits that are currently available. The result will be a pro-growth tax code that still raises the necessary revenue, retains the existing progressivity, and ensures that middle-income Americans see real tax relief.
And while Romney has a new tax plan, he didn’t offer many details on how he would deal with Medicare and Social Security. This is all his campaign had to say:
Looking ahead to yawning future deficits from the unfunded promises of Social Security and Medicare that threaten the nation’s solvency and foreshadow growth-destroying tax hikes, Romney proposes to shore up these important programs without impacting seniors who are at or near retirement, and without tax hikes.
· Social Security. For younger generations, gradually raise the retirement age and index the growth in benefits for higher-income retirees to inflation instead of wages.
· Medicare. For younger generations, create a premium support system that gives each senior the freedom to choose among competing private plans and traditional fee-for-service Medicare.
More details from the Romney campaign about the tax plan below the jump.
· Make Permanent, Across-The-Board 20 Percent Cut In Marginal Rates. This bold stroke reduces the tax on the next dollar of income earned for all taxpayers. The new top rate of 28 percent returns to the top rate signed by President Reagan in 1986.
· Promote Savings And Investment For The American People. Mitt Romney will maintain the current 15 percent rate on income from qualified dividends and capital gains. He will cut taxes further on lower- and middle-income Americans by ensuring that families with an annual income below $200,000 will pay no taxes on income from capital gains, interest, and qualified dividends. These low tax rates will create powerful incentives for Americans to save and invest, while spurring business investment and economic growth.
· Abolish The Death Tax. Eliminating the death tax will allow families to pass assets between generations without complicated tax avoidance schemes and without breaking up family businesses.
· Repeal The Alternative Minimum Tax (AMT). The AMT was originally implemented in the 1970s with the purpose of ensuring that the wealthiest of Americans could not artificially reduce their tax burden. But if Congress fails to pass the annual AMT patch, many middle-income Americans will become ensnared in the AMT trap. It should be repealed immediately to eliminate harmful distortions in the tax code, and replaced with a simpler tax system that reduces tax avoidance schemes.
· Cut The Corporate Rate To 25 Percent. It is vital that the U.S. move to quickly reduce the corporate tax rate and put American companies on a level playing field. The high U.S. corporate tax rate handicaps the nation’s overall economy in competition with the rest of the world.
· Strengthen And Make Permanent The R&D Tax Credit. This credit promotes innovation in both manufacturing and non-manufacturing industries, and helps businesses plan their innovation spending. With a strong, permanent credit, companies will now be able to invest for the future with confidence.
· Switch To A Territorial Tax System. The United States taxes income on a worldwide basis, regardless of where it is earned. This worldwide system of taxation sets the U.S. apart from most other OECD countries, which have converted to territorial systems of taxation. Japan and the United Kingdom are two countries that recently traded their worldwide tax systems for territorial systems. This switch will promote U.S. interests in two key ways:
· Repeal The Corporate Alternative Minimum Tax (AMT). One major drawback of the Corporate AMT is its effect of penalizing companies that invest in capital equipment. A growing economy depends on robust capital investment. Unfortunately, corporations that are subject to the Corporate AMT are unfairly hit by strict depreciation rules. Due to this chilling effect on capital investment, the corporate AMT must be fully repealed. Investment will no longer be penalized, spurring labor productivity, an increase in American incomes, and greater economic prosperity.