WASHINGTON Reflecting their political philosophies, President Barack Obama and Republican challenger Mitt Romney take sharply divergent paths when it comes to taxing individuals and corporations.
Their basic approach is easy to distinguish: Obama wants to raise taxes on the wealthiest Americans; Romney would slash rates across the board.
But many key details for Romneys plan in particular are lacking and make side-by-side comparison a challenge. And experts warn that neither plan appears sustainable, as they wouldnt scratch the nations mounting deficit unless theyre offset by other tax hikes or matched by sweeping cuts in spending.
The biggest flaws are that at some point we need to be talking about not looking for more and more tax cuts, we need to talk about how to get the revenue to pay for our spending promises, said Joshua Gordon, policy director at the nonpartisan Concord Coalition, which advocates fiscal responsibility. The fiscal challenges over the long term are too much to deal with just on the spending side.
Heres what each proposes to do:
Income taxes are about to increase for all Americans when the George W. Bush-era tax cuts expire on Dec. 31. The two candidates differ on what to do.
Obama proposes to:
Extend the Bush-era tax cuts for incomes below $200,000 for individuals and families above $250,000.
Repeal the Alternative Minimum Tax that hits middle-class taxpayers as their incomes rise.
Let Bush-era tax cuts expire for individual incomes above $200,000 and family incomes above $250,000.
Enact a 30 percent minimum tax on all income in excess of $1 million.
The focus of Obamas plan is to extend tax cuts for the middle class and to raise taxes on higher incomes, what he calls an issue of fairness.
He could raise taxes, though, on incomes below $200,000. Most notably, hes likely to agree to let a temporary 2 percentage point cut in the payroll tax expire as scheduled on Dec. 31. That would raise every Americans taxes, regardless of income.
Romney wants to:
Extend the Bush-era tax cuts for all incomes.
Cut all income tax rates by another 20 percent.
Limit some deductions so higher income taxpayers still pay the same despite the cut in tax rates.
Repeal the Alternative Minimum Tax.
End taxes on capital gains, interest and dividends for incomes below $200,000.
Romney also appears ready to let the payroll tax rise by 2 percentage points.
Generally, Romney looks to tax cuts and tax simplification to put more money in peoples pockets and help boost economic growth. They could, however, add to the annual budget deficits and the accumulating debt more than Obama, which could be a drag on growth.
By themselves, the cuts in tax rates would give the biggest break to wealthier Americans, who pay more in taxes.
Romney pledges to make his plan revenue neutral and says the wealthy would continue the same share of the governments total tax collection. But hes refused to identify which tax breaks hed target to balance the books, and experts with the Tax Policy Center said that makes a side-by-side comparison impossible.
The center said there arent enough tax breaks for the wealthy for Romney to target and that hed be unable to keep his promise to keep his plan revenue neutral without eliminating tax breaks for the 95 percent of households with incomes under $200,000.
Romneys campaign rejects the policy centers report, and Romney during last weeks presidential debate insisted that he wouldnt raise taxes on the middle class or grow the deficit.