A comparison of the tax platforms of the two candidates

The presidential election in November will likely have major implications for the tax code. A number of factors are converging in late 2012 and early 2013 that will force lawmakers to make decisions that could dramatically reshape tax policy, including:

  • the expiration of the 2001 and 2003 income tax cuts;
  • the expiration of the estate and gift tax rules enacted in late 2010;
  • spending "sequestration," scheduled to take effect in 2013 as federal debt reaches the statutory debt limit; and
  • alternative minimum tax relief and "tax extenders," which expired in 2011.

Taxes are emerging as a major campaign issue. Legislative action remains unlikely during the campaign, so the outcome of the election will likely affect how the issues are addressed.

A direct side-by-side comparison of the tax platforms of President Barack Obama (Democrat) and Republican candidate Mitt Romney is difficult. While Obama has an extensive record on tax issues in both the Senate and the White House, Romney has no federal tax legislative record. In addition, the budget process has forced Obama to lay out detailed policy preferences on scores of tax issues, while Romney's campaign platform, like most platforms, focuses on only broad principles. It's also important to remember nearly all successful candidates show meaningful differences between their campaign platforms and their accomplishments once elected. Obama has proposed significant tax increases in his campaign and budget proposals, but over the past four years he has signed tax cuts that greatly outweigh tax increases. And while Romney largely made good on promises not to raise taxes as governor, he did raise revenue through user fees and some targeted tax changes.

So no one should expect either tax platform to be enacted exactly as currently proposed. Obama's reelection does not guarantee that taxes will increase for taxpayers targeted in his campaign, especially because Republicans are likely to retain the House and may retake the Senate. Even if Democrats retain the Senate, Senate Democrats may insist on more taxpayer-favorable rules than those proposed by the president. Romney's election would not guarantee the absence of tax increases. Even if Republicans retain the House and take the Senate, they are very unlikely to achieve the 60-vote majority in the Senate necessary to overcome filibusters. While budget reconciliation can be used to overcome procedural hurdles, there are limits to the process, and compromise may still be needed. The office of the president, however, wields considerable legislative power, and the winner of the election will have a unique opportunity to shape future tax policy. Obama and Romney have revealed important policy contrasts, detailed in the following table.

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