Romney has also promised not to raise taxes on the middle class. However, while most people who itemize deductions tend to make more than average, that still accounts for about 30 percent of taxpayers. In higher-cost areas, eliminating all deductions would certainly hurt middle class people. Eliminating the mortgage interest deduction would hurt middle class people. Introducing a capital gains tax by repealing the estate tax would hurt the middle class and be horribly regressive. It would mean that middle class people would have to pay a potentially huge capital gain on the sale of a house owned by an older relative, while millionaires get a tax break.
What this? I don't think Romney proposed raising capital gains taxes.
If Simpson-Bowles can find enough deductions to lower rates significantly and still generate revenue, Romney can lower rates even more and come out revenue neutral. The problem with that is that then nothing's done directly on the deficit. A better tax structure could help with economic growth and thus bring in more revenue, but there's no way to know how large this effect would be.
