10/18/2012 10:44 am ET

Romney Tax Plan, Complete With Debate Change, Still Helps Rich Most: Analysis

Republican presidential nominee Mitt Romney unofficially presented a new tax proposal during the second presidential debate Tuesday night, saying that "one way of [bringing down deductions] would be to say everybody gets -- I'll pick a number -- $25,000 of deductions and credits, and you can decide which ones to use."

Even when accounting for a theoretical $25,000 cap on itemized deductions, or tax breaks that incentivize people to do things ranging from buying houses to donating to charity, Romney's overall tax plan would lighten the tax burden of the rich the most, according to a new analysis by the Tax Policy Center, a nonpartisan, nonprofit think tank.

Under Romney's new plan, including the cap on itemized deductions, the average family in the top one percent would rake in a $104,563 tax cut, while the average family in the middle quintile would get a $722 tax cut, according to the Tax Policy Center. The average family in the top 0.1 percent would receive even more: a $496,115 tax cut.

That means that the average federal tax rate of the top one percent and top 0.1 percent would plunge by nearly one-fifth. Meanwhile, the average federal tax rate of the middle quintile would fall by just eight percent, and the average federal tax rate of the bottom fifth would rise by roughly two-thirds.

The Tax Policy Center additionally found that the proposal to cap deductions would not raise enough revenue to pay for Romney's proposed tax cuts.

Romney has taken heat for promising to cut marginal tax rates by 20 percent, slash taxes on investment income, not raise taxes on the middle class and not increase the deficit, all at the same time. The Tax Policy Center and several commentators have called the plan mathematically impossible. Some commentators, such as Washington Post columnist Ezra Klein, also have said that Romney's tax plan would benefit the rich at the expense of the middle class and the poor.

(Hat tip: University of Michigan economics professor Justin Wolfers.)