Romney's plan to swap a $5 trillion slice of revenue over a decade from rate cuts while gleaning an equally big slice of revenue by curbing deductions and other tax breaks faces enormous, perhaps insurmountable challenges. The estimate comes from the Tax Policy Center, a think tank that's a joint project of the Brookings Institution and the Urban Institute.
The nonpartisan think tank recently rattled the debate with a study that estimated that Romney's plan would require slashing middle-class tax breaks so deeply that a family making between $75,000 and $100,000 could have to pay an average $2,000 more.
The Romney campaign disputes the math and the methodology and insists it's possible to do. Romney himself has tossed out hints that he might cap taxpayer deductions at, say, $17,000, $25,000 or $50,000. A campaign aide said he's considering curbing personal exemptions and the tax exclusion of employer-paid health insurance, particularly for those with higher incomes.
But without specifics it's impossible to analyze who would pay more and who would pay less. For families with children, a big mortgage, and who live in high tax states, for instance, might face a tax increase, while people who've paid off their houses and live in low tax states would see a tax cut.
Obama's core promise on taxes is what it's always been: Renew the tax cuts passed during George W. Bush's tenure, except for individuals whose income exceeds $200,000 and for married couples exceeds $250,000. That would raise the top income tax rate from 35 percent to 39.6 percent, back where it was during the Clinton era.
Obama also recommends limiting itemized deductions for such higher earners, phasing out their personal exemptions and increasing their rate on capital gains from 15 to 20 percent.
But Obama has never fought hard for the official tax plan that's in his budget, though he vows to hold the line and increase taxes on the wealthy if re-elected.
Instead, Obama hints he could support comprehensive tax reform like he did in negotiations with GOP House Speaker John Boehner of Ohio last summer. The Democratic platform says he's "committed to reforming our tax code so that it is fairer and simpler" and also guarantees that "no millionaire pays a smaller share of his or her income in taxes than middle class-families do."
It's commonly believed in Washington that the only way Republicans could ever vote for higher revenues — no easy assumption — is as part of a tax reform plan that lowers all rates, sharply curbs tax breaks and skims some of the revenue to defray the deficit.
Some Democrats, like Sen. Chuck Schumer of New York, say it's impossible to do all three without hitting the middle class.
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