Feb. 10 (Bloomberg) -- Republican presidential candidate Mitt Romney is preparing to release a more detailed plan to overhaul the tax code soon, said a person who attended a policy roundtable event with Romney in Washington yesterday.
Romney expressed general interest in consumption taxes and flat taxes, said the person, who spoke on condition of anonymity because the meeting was private. Romney described consumption taxes as not politically feasible and said flat taxes may open him to criticism about the potential effect on his personal tax bill, the person said.
The forthcoming Romney tax plan would lower income tax rates and curtail deductions, the person said. Romney, who has been criticized by Republican rival Newt Gingrich for being too “timid” on taxes, may draw from ideas proposed by the bipartisan deficit-reduction fiscal commission led by former Senator Alan Simpson and Erskine Bowles.
Speaking to about 900 people in Reston, Virginia, this morning, Romney sketched out the broad points of the tax plan he previously announced, including immediately cutting the corporate tax rate to 25 percent from 35 percent, and scrapping investment taxes for middle-income earners.
‘Broaden the Base’
“Part two,” Romney told the audience during an appearance before the Northern Virginia Technology Council, “would be to move our tax system in the direction of the Bowles-Simpson Commission’s recommendations, where they said, ‘Look, can’t we lower the rates and broaden the base, by eliminating some deductions and exemptions.’”
In addition to those changes, the Bowles-Simpson commission, created by President Barack Obama, called for restructuring the tax code in a way that would raise more revenue than the current tax system, an idea that Romney has rejected.
“Tax hikes, they’re off the table,” Romney said at the Conservative Political Action Conference today in Washington.
Ed Lorenzen, who served on the Bowles-Simpson commission’s staff, said in an interview that deficit reduction was the group’s goal. Using revenue from curtailing tax breaks solely for tax-rate reduction would make enacting the entire Bowles-Simpson package more difficult, he said.
Promote Economic Growth
“What the commission tried to do was try to find a way that could reduce the deficit with revenues as part of the overall package, but do it in a way that would not harm the economy and hopefully promote economic growth,” said Lorenzen, now executive director of the Moment of Truth Project, which was formed to carry on the commission’s work.
Andrea Saul, a spokeswoman for Romney, didn’t respond today to a request for comment on the more detailed tax plan and when the campaign might release it.
Romney’s Republican rivals have said the tax plan he released last year doesn’t go far enough to overhaul the U.S. tax code.
“What we’re going to do over the month of February is lay out very big choices,” Gingrich, a former House Speaker, said on “Face the Nation” on CBS Feb. 5. “I have a very bold tax plan The Wall Street Journal said was the most aggressive job creation program. They described Governor Romney’s as so timid it could have been Obama’s.”
Lower Tax Rates
Romney has proposed extending current income tax rates, eliminating capital gains taxes for those earning $200,000 or less a year and dropping the corporate income tax rate to 25 percent from 35 percent. He would also repeal the estate tax and allow 2009 tax breaks for low-income families to expire.
In contrast, Gingrich has proposed an optional flat tax with a top tax rate of 15 percent and no taxes on capital gains. Former Senator Rick Santorum is proposing eliminating the corporate income tax for manufacturers, cutting the top individual tax rate to 28 percent and tripling the exemption for dependent children.
Any new tax plan from Romney will need to surprise voters to be effective politically, said Chris Chocola, president of the Club for Growth, which supports low taxes.
“If he’s going to tinker around the edges, then it will likely be disappointing for him and put him backwards,” said Chocola, a former member of Congress from Indiana. “If he’s going to be bold and original, then it’s going to help him.”
Romney has said before that he would push for a “fundamental redesign” of the tax code without offering details on how he would do that.
Romney released his tax returns in January, showing that in 2010 he paid 13.9 percent of his $21.6 million adjusted gross income in federal taxes. Most of his income came from capital gains and dividends taxed at preferential rates, and his campaign stressed at the time that Romney would fare better personally under Gingrich’s tax plan than under his own.
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