Mitt Romney and Paul Ryan have declined to offer specifics on which tax deductions they’d eliminate in order to cut tax rates without cutting the amount of taxes paid, particularly for the rich, but Marco Rubio, the Florida senator whose voice goes far in the Republican Party these days, said there are two he’d take off the table right away.
Those include the charitable deduction and the home interest deduction used to offset interest paid on mortgages. Rubio made the comments in New York today and they were reported by Buzzfeed.
There are expected to be about $1.1 trillion in tax “expenditures” — aka deductions — in 2012. And about $942 billion of those are claimed by individuals, according to the Tax Policy Center.
That starts to chip away at available tax deductions that could be eliminated to pay for the 20 percent across-the-board rate cut that Romney proposes.
The mortgage interest deduction is expected to be worth about $83 billion in 2012, according to the Joint Committee on Taxation. The charitable deduction is worth about $31.5 billion for items not related to health and education, and $5.4 billion for education-related donations and $2.7 billion for health-related donations, according to the JCT.
Download the JCT’s charts here.
Some nonpartisan groups, including the Tax Policy Center, have questioned whether Romney’s plan could work. And into that argument waded the non-partisan JCT, a scorekeeper on Capitol Hill. In a letter released Oct. 12 to lawmakers, the JCT chief of staff said that his outfit had performed an “experiment” and run the numbers on repealing some popular deductions, including the mortgage deduction and the charitable deduction, to see how far rates could be lowered.
The result? JCT’s scenario suggested tax rates could be reduced by 4 percent to bring in the same amount of revenue. Mitt Romney wants to lower rates by 20 percent.
JCT kept deductions like the ones for tax-favored retirement accounts and for employer-sponsored health insurance and it had important differences with what we know about Romney’s plan, like assuming that capital gains would be taxed as income and not preferential rates as it currently is. It assumed that the Bush-era tax cuts would expire, although Republicans want to extend them for everyone and many Democrats want to extend them for people making less than $250,000.