Fact Check: Obama Ad Criticizes Romney's Tax Plan

By Steve Kanigher

Published 08/17 2012 06:48PM

Updated 08/17 2012 07:15PM

Claim: A new advertisement endorsed by President Barack Obama that is airing in Southern Nevada has this to say about Republican presidential candidate Mitt Romney: "You work hard, stretch every penny, but chances are you pay a higher tax rate than him. Mitt Romney made $20 million in 2010 but paid only 14 percent in taxes, probably less than you. Now he has a plan that would give millionaires another tax break and raises taxes on middle class families by up to $2,000 a year. Mitt Romney's middle class tax increase. He pays less. You pay more."

Verdict: Partly true and partly misleading. The 2010 federal income tax return filed by Romney and wife Ann showed they had an adjusted gross income of $21,646,507 and were taxed $3,009,766 for an effective tax rate of 13.9 percent. While middle class taxpayers also have access to effective lower tax rates through capital gains and itemized deductions, most people cannot claim anywhere close to the $12.5 million in capital gains and $4.5 million in itemized deductions (including nearly $3 million to charity) that the Romneys did for 2010. As for the claim that Romney's tax plan would benefit millionaires but hurt the middle class, the source is an Aug. 1 study from the Tax Policy Center, a collaboration of the Urban Institute and Brookings Institution think tanks. The ad is true if one believes all the assumptions in the study will come to pass, but that's a big ‘if.' The authors stated that they didn't score Romney's plan directly "as certain components of his plan are not specified in sufficient detail, nor do we make assumptions regarding what those components might be." It isn't clear whether the authors would have reached a different conclusion had Romney provided more detail. The reality, though, is that any tax plan advocated by a president must still be approved by Congress. This is worth noting because the ad used the Aug. 1 Wall Street Journal headline, "Study: Romney's Tax Plan Hits Middle Class." But the author of the story concluded with this: "The study makes an assumption that might or might not prove out when the legislation gets written -- notably, that capital gains and dividend rates aren't changed from the current 15% top rate for high earners. Holding the line on current investment tax rates is GOP orthodoxy right now,. But when deal-making time arrives, it's possible that GOP opposition will soften, if it's necessary to get a broader deal with Democrats on lower rates."

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