The Romney campaign has pooh-poohed the Tax Policy Center analysis of the idea that rate reductions could be achieved in a revenue- neutral plan by curtailing unnamed deductions and other tax benefits. The Joint Committee on Taxation has now weighed in and their analysis is even grimmer. Their conclusion is that such a plan could only reduce rates (compared to the current law 15% to 39.6% for 2013 and later i.e. without the Bush rate cuts) by 4% as opposed to Romney's 20% goal. This would make the rate structure begin at 14.40% (from 15%) and end at 38.02% (instead of 39.6%). Here are the assumptions and parameters of the model: 1. It is based on the standard economic model used by JCT and CBO to score tax and spending bills for effect on the deficit. This is more than a mere adding up of static numbers, it is the outcome of the same model to generate the figures used by both parties. 2. It assumes ----- the permanent repeal of the alternative minimum tax, PEP and Pease limitations, ----- the permanent elimination of all itemized deductions, ----- the permanent extension of current law provisions for the earned income tax credit and the child tax credit, ----- repeal of the interest exclusion on post-2012 state and municipal bonds, ----- taxing all dividends and capital gains at ordinary income rates, ----- reduce all marginal rates by 4%. The model is relatively revenue-neutral over the period 2013--2022. Distributional effects are that the big winners would be taxpayers showing $50,000 or less of modified AGI (especially those with modified AGI between $10,000 and $ 20,000 who would see a tax reduction of 61.4%) and the big losers those whose modified AGI exceeds $100,000 (especially those whose modified AGI exceeds $1,000,000 who would see a tax increase of 7.1%). Those with modified AGI under $100,000 would see a reduction in taxes, with those with modified AGI seeing small increases (under 3%) except for millionaires. If we take 2015 for a good out year to compare numbers, virtually all of the revenue increase is $215 billion from the elimination of all itemized deductions. Of this $68.4 billion is used to pay for repealing the AMT, $30.7 billion pays for repealing the PEP and Pease limitations, $71.5 to reduce marginal rates 4%, and $44.3 billion to extend the EITC and child credit. Net increase in revenue would be $4.1 billion. So folks, it ain't gonna work. Lowering marginal rates anywhere near 20% will take a lot more than axing itemized deductions in their entirety.