President Barack Obama
To see where the presidential candidates stand on taxing the rich, just look at how they'd tax themselves. Under his own proposal, Mitt Romney would pay half what he would under President Barack Obama's tax plan. For a man of Romney's means, that could save almost $5 million a year.
For Obama, not so loaded as Romney but still well-off, losing re-election could provide a tax windfall. He'd save as much as $90,000 a year if Romney's plan were enacted rather than his own tax-the-rich vision, reports The Associated Press.
Two non profit research groups, the liberal-leaning Citizens for Tax Justice and conservative-leaning Tax Foundation, did the calculations, based on the most recent completed tax returns released by the candidates. Compared with what they owed in April, both men would be dinged in 2013 under Obama's proposal, along with other wealthy taxpayers. They could expect savings under Romney, depending on which tax breaks the former Massachusetts governor decides to oppose.
Whether they go up or down, the candidates' personal tax bills won't make a dent in the nation's trillion-dollar annual deficits, of course. But they illustrate a sticking point in the struggle to fix the nation's finances: Just how much should affluent Americans pony up?
Democrats generally say the rich aren't paying their fair share; most Republicans argue that raising taxes on the wealthy would slow investment that creates jobs. The dispute makes it tougher to tackle urgent budget issues, such as whether to extend the Bush-era tax cuts again before they expire January 1.
Support for continuing the tax cuts for the middle class is wide, but a fight is under way over what to do about the wealthy.
"There's quite a difference at higher incomes between the Obama and Romney plans," said Gil Charney, principal tax researcher for the Tax Institute at H&R Block. "Obama is looking at the rich — millionaires and billionaires — as a source of additional revenue to the government, where Romney is looking at them as a potential spark for economic growth."
Obama's plan would hit couples making more than $250,000 per year from several directions, raising their tax rate, dunning them more for investment income, and limiting their tax deductions. People like Romney with earnings from private equity management would lose a big tax break. And Obama would establish a rule, named after billionaire Warren Buffett, to ensure that households taking in more than $1 million a year pay at least 30 percent in taxes.
Obama's health care law, already in place, also raises Medicare taxes on the wealthy, especially big investors, starting in 2013. That could cost Romney more than $800,000.
None of this would come close to balancing the budget, but it could add billions of dollars per year to help reduce the deficit.
Romney wants to lower current tax rates for everyone by 20 percent. This benefits the wealthy most: Dropping the highest bracket from 35 percent to 28 percent, for example, yields a much bigger savings for those at the top than lowering the 15 percent bracket to 12 percent brings for taxpayers in that group.