Feb. 22 (Bloomberg) -- Mitt Romney called for a 20 percent across-the-board cut in individual income tax rates today as part of an effort by his campaign to turn the focus of the Republican presidential primaries back to economic issues.
Romney’s plan would lower the top tax rate to 28 percent for individuals from 35 percent now, cut corporate taxes to 25 percent from 35 percent, eliminate the estate tax and scrap the alternative minimum tax. It also would limit the deductions, exemptions and credits that are currently available to higher-income Americans.
“We are going to cut back on that so we make sure the top 1 percent keeps paying, paying the current share they’re paying or more,” Romney told a campaign rally in Chandler, Arizona. “We want middle-income Americans to be the place we focus our help, because it’s middle-income Americans that have been hurt by this Obama economy.”
The campaign hasn’t specified how deductions and other tax breaks for high-income taxpayers would be limited. The top tax rates on capital gains and dividends would remain at 15 percent.
The plan wouldn’t cost any more than would extending the Bush-era tax rates that expire at the end of 2012, Glenn Hubbard, a Romney economic adviser, told reporters on a conference call today. That assertion of revenue neutrality uses a different definition than the one that nonpartisan congressional scorekeepers would use.
The campaign assumes that some of the revenue will come from stronger economic growth, not solely from eliminating or curtailing tax breaks. Hubbard didn’t specify how much of the offsetting revenue would come from growth.
To offset the cuts and reduce the federal budget deficit, Romney said he’d trim $500 billion in spending by 2016.
He’s working to regain momentum in the race as he strives to take back his front-runner status from Rick Santorum before the Feb. 28 Michigan and Arizona primaries.
As Santorum has surged, social issues have become a central topic in the race. By releasing his proposal today, hours before a potentially crucial televised debate tonight in Mesa, Arizona, Romney is seeking to return the conversation to the economy and his business background.
‘Welcome to the Party’
Santorum said today Romney was seeking to cut taxes to levels he has already proposed.
“Welcome to the party, governor, it’s great to have you along,” Santorum said at a Tea Party rally in Tucson.
Statewide polls show a close contest in Michigan and that Santorum, a former senator from Pennsylvania, is narrowing Romney’s edge in Arizona. A Romney loss in Michigan, his boyhood home, would deal a severe blow to his campaign.
Romney’s announcement also comes as President Barack Obama called for cutting the U.S. corporate tax rate to 28 percent. Obama’s plan would remove tax breaks for companies to help offset lost revenue and make other structural changes to the tax code, including limits on the deductibility of interest.
Speaking in Arizona this morning, Romney said Obama’s plan would raise taxes on small businesses that pay personal income tax rates rather than corporate taxes. Many small businesses -- and some large ones -- pay taxes on their profits on their individual tax returns.
“President Obama’s plan is to raise taxes on those enterprises,” he told voters gathered in a high school gym. “My plan is to lower them by 20 percent.”
Reducing the top corporate tax rate to 25 percent was a central point of an economic proposal Romney offered in September. The former Massachusetts governor’s plan, which would eliminate taxes on interest, dividends and capital gains for individuals making $200,000 or less per year, had come under criticism over a lack of details.
Tonight’s debate on CNN -- which will include former U.S. House Speaker Newt Gingrich and U.S. Representative Ron Paul of Texas -- will be the last direct exchange among the candidates scheduled before Super Tuesday on March 6, when 11 states hold contests that should play a major role in determining who secures the Republican nomination.
For Santorum, 53, it is a chance to reintroduce himself to voters who may have written off his candidacy weeks ago when he was lagging in polls and fundraising. Romney, 64, is trying to reinvigorate his bid and reiterate his campaign theme that he’s a strong and steady executive best positioned to defeat Obama in November’s election.
Gingrich, 68, is pressing for the type of strong debate performance that periodically has boosted his candidacy and that he needs now to gain some momentum heading into Super Tuesday. Paul, 76, also will be looking ahead to the March 6 contests, which include caucuses that give supporters attracted by his libertarian agenda stressing a limited federal government their best chance of accruing convention delegates.
The importance of the Michigan primary is underscored by escalating advertising by political action committees aligned with Santorum or Romney.
A new commercial being aired in Michigan by the Red White and Blue Fund, a super-PAC supporting Santorum, charges that Romney increased spending, taxes and fees as governor of Massachusetts and implemented a “blueprint” for the U.S. health-care law.
“How can Mitt Romney beat Barack Obama when, on the vital decisions, they’re not much different?” a narrator asks.
Michigan Ad Buy
The group, which can raise and spend unlimited amounts on Santorum’s behalf, purchased an additional $600,000 in commercial time in Michigan, spokesman Stuart Roy said yesterday. That brings the super-PAC’s total expenditures on the state’s airwaves to boost Santorum to about $1.3 million, he said.
Restore our Future, the pro-Romney super-PAC, also began airing new negative ads yesterday in Michigan, according to New York-based Kantar Media’s CMAG, which tracks advertising.
The commercial attacks Santorum for voting during his time in Congress to raise the federal debt-ceiling and for securing federal funds for parochial spending projects known as earmarks. It also criticizes Santorum’s 2002 Senate vote to authorize ex-convicts to vote in federal elections.
Romney’s campaign and Restore Our Future spent $810,980 on broadcast television ads in Michigan as of Feb. 18, compared with what was then $262,260 by Santorum’s campaign and Red White and Blue Fund, CMAG data show.
Santorum, in remarks yesterday at a party luncheon in Phoenix, highlighted what he termed “a track record of cutting spending and taking on the big entitlements,” of fighting “radical Islamists” and “of standing up for the basic foundational pillars of our society: faith and family.”
He drew implicit contrasts with Romney and Gingrich, calling himself an “authentic conservative” and saying: “I’m not a manager. I’m not a visionary. I’m a guy from a steel town who grew up understanding what made this country great.”
At a rally last night in Phoenix, Santorum indirectly responded to a fresh focus on a 2008 speech he gave in which he said Satan was targeting America.
“I’ll defend everything I’ll say, because it comes from here,” Santorum said, pointing to his heart. He compared his sometimes strong language to when Ronald Reagan, during his presidency, branded the former Soviet Union as an “evil empire” and was criticized for doing so.
Romney yesterday touted his commitment to socially conservative principles such as opposing abortion rights.
“My vice presidential nominee will be pro-life,” he told voters in Shelby Township, Michigan, when asked about his running-mate. “If I’m fortunate enough to become the nominee, I will also choose someone who is conservative to the core.”
In Michigan, where Romney’s father served as governor, Santorum’s support rose after he swept contests in Colorado, Minnesota and Missouri on Feb. 7 -- victories that also spurred the increase in his national backing. Polls in the last few days in Michigan have shown a neck-and-neck race between the two.
In Arizona, Romney leads Santorum by 36 percent to 32 percent, according to a CNN/Time/ORC poll. The Feb. 17-20 survey of likely voters in the Republican primary has an error margin of plus-or-minus 4.5 percentage points. Most other recent polls showed Romney with a larger lead.
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