Politics

Romney proposes 20% cut in tax rates

WASHINGTON -- It’s a day of dueling tax plans.

Moments after President Obama rolled out a sweeping overhaul proposal for corporate taxes -- wiping out many deductions while reducing the corporate tax rate -- Republican primary contender Mitt Romney this afternoon introduced tax reductions of his own.

The differences between the two plans reflect the divergent approaches to taxes underlying their election campaigns.

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Obama has chosen not to pursue changes in income tax rates, and instead wants to eliminate tax breaks, deductions, and special strategies that allow many American companies to dramatically discount the amount of taxes they pay. Obama would lower the corporate tax rate from 35 percent to 28 percent as part of the deal.

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Romney is relying on a new set of tax cuts on individuals, as well as corporate tax cuts he previously proposed, to jump-start the economy.

The Romney proposal calls for a 20 percent reduction in marginal tax rates -- which would reduce taxes across all brackets. That is a change from the plan Romney released last year, in which he called for no change in marginal tax rates. Romney says he wants a flatter tax code -- which places him closer to a conservative ideal -- and lowering taxes on upper income brackets would be the central step. Romney today also reiterated his call for a reduction in the corporate tax rate from 35 percent to 25 percent.

Relying on traditional GOP supply-side economics, the plan presented by the former Massachusetts governor adds a bit more definition to 59-point economic plan he unveiled last year.

But Romney still does not spell out in his new plan how he would make up for the lost income with the tax cuts, or how he would reach his goal of reducing the US budget to 20 percent of annual gross domestic product.

Tracy Jan can be reached at tjan@globe.com. Follow her on Twitter @GlobeTracyJan.