Romney Advocates 20% Across-the-Board Tax Cut for All Americans

(The Wall Street Journal) - Republican presidential candidate Mitt Romney called Wednesday for an across-the-board cut in individual tax rates and the elimination of the Alternative Minimum Tax.

The former Massachusetts governor said that, as president, he would direct Congress to make up for any lost revenue by limiting existing deductions, particularly those for wealthier Americans. Romney aides, speaking ahead of a planned speech on the subject by the candidate, did not say which deductions would be targeted. The plan is intended to be revenue neutral, aides said.

Romney is unveiling the latest details of his economic blueprint at a critical juncture in his White House bid, with rival GOP candidate Rick Santorum presenting a strong challenge to him ahead of primary elections in Michigan and Arizona on Tuesday. Romney needs strong showings in both states to reclaim his frontrunner status

Romney wants to cut individual tax rates by 20 percent in all six brackets, reducing the tax the wealthiest Americans pay to 28 percent from 35 percent. That target is slightly higher than the 25 percent rate Romney laid out earlier in the campaign.

The tax rate for people in the lowest income bracket would drop to eight percent from 10 percent and would fall to 20 percent from 25 percent for those Americans in the middle.

Romney would maintain the current 15 percent tax rate on capital gains and dividends for households that earn $200,000 a year or more. Those earning less than that amount would pay no taxes on capital gains and dividends under his plan.

The former private-equity investor also would wade into the contentious fight over so-called carried interest, the tax investment managers pay on capital appreciation.

These investment managers are currently taxed at the 15 percent capital gains rate. Glenn Hubbard, dean of the business school at Columbia University and a Romney economic adviser, said Romney would direct his Treasury secretary to determine what portion of these investment returns should be taxed as income, which carries a higher tax rate, and what should be taxed at capital gains rates.

Romney's plan is the latest of several economic proposals he has released. The former governor unveiled a 59-point blueprint for the economy in September in which he called for reducing the corporate tax rate to 25 percent from 35 percent, but he steered clear at that point of offering detailed changes to the tax code for individuals.

Instead, he said he wanted to make it flatter and more fair.

In his remarks on Wednesday, Romney offered no specific proposals to increase revenue through the tax code, such as plans recommended by others to limit deductions for mortgage interest or charitable contributions for millionaires. Instead, he would leave those decisions to Congress. Advisers said he would ask lawmakers to focus on changes that asked more of the richest Americans than those at the lower end of the income scale.

Eliminating the Alternative Minimum Tax would reduce tax collections about $57.5 billion in 2012, assuming Congress renews a "patch" to continue easing the burden for some taxpayers, according to estimates from the Tax Policy Center.

The across-the-board tax cut is sure to be expensive. Cutting all tax rates by one percentage point could cost roughly $19 billion.

Read more: The Wall Street Journal