The tax proposals of Newt Gingrich could yield a windfall in tax savings, both for himself and his primary opponent, Mitt Romney, if they were enacted into law, according to a new analysis by the liberal group Citizens For Tax Justice.
The reason is simple: Gingrich has proposed zeroing out capital gains taxes, which would effectively reduce Mitt Romney’s tax burden to zero, according to the analysis, saving Romney millions of dollars a year. Gingrich himself would also benefit from a reduction in the regular income rate from more than 30 percent for high-income individuals to a standard 15 percent rate. “Gingrich is complaining about Romney paying less than the American people, but he wants him to pay nothing,” says Bob McIntyre, who did the analysis.
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In recent days, Gingrich has had some fun with Mitt Romney’s tax returns at his rival’s expense. “I think we ought to rename our flat tax,” Gingrich said at a campaign stop in Columbia, S.C., this week, “so this would be the ‘Mitt Romney flat tax.’ All Americans would pay the rate that Mitt Romney paid. I think it’s terrific.” Gingrich did not add that his plan would also provide a huge boost to Romney’s own pocketbook, effectively reducing his income tax rate to nothing by eliminating taxes on capital gains and dividends for all earners.
Under McIntyre’s analysis, based on estimates provided in financial disclosure forms, Romney paid an estimated $3.3 million in income taxes in 2010, on estimated income of more than $20 million. If Gingrich’s proposed rules had been in effect, Romney would have paid no income tax, since his deductions would have more than compensated for his non-capital gains sources of income.
Gingrich would also benefit from his own policies. In 2010, Gingrich paid about $990,000 in income taxes, or about 31.5% of his gross income, according to his recently released income tax forms. If his own plan had been in place, Gingrich would have paid just $450,000 in 2010, or less than half as much, McIntyre said.
Romney’s tax plan would also zero out taxes on capital gains, but only for families making less than $200,000 a year, disqualifying Romney and other high-income investors from the windfall. Under the same plan, Bush’s 2001 and 2003 tax breaks would be permanently extended, and the estate tax would be eliminated along with assessments included in Obama’s health reform law, thus decreasing both Romney’s and Gingrich’s tax burden in the long term.
The Gingrich campaign released its candidate’s tax returns while Gingrich was standing next to Romney on stage at Thursday’s debate. The move, among other things, had the effect of highlighting Romney’s wealth, which Romney has had a difficult time speaking about in public in recent months. Romney reacted defensively. “I know there are some who are very anxious to see if they can’t make it more difficult for a campaign to be successful,” Romney said. “I know the Democrats want to go after the fact that I’ve been successful. I’m not going to apologize for being successful.” Earlier this week, Romney told reporters that he pays about 15% of his total income in federal taxes, a number that closely matched the 14% that McIntyre had estimated in October, based on a review of Romney’s financial disclosure forms.
Romney has said he plans to release his tax returns to the public in April, after he has filed his 2011 returns. He says he has not yet decided how many years of returns he will release.