The Ryan Tax Plan: A Boost to the Superwealthy

Representative Paul Ryan’s most recent tax plan would have only two rates: 10 and 25 percent. Cutting the top marginal tax rate from 35 to 25 percent entails a large revenue loss, which Ryan purports to make up by broadening the tax base and eliminating tax breaks. The problem is that he doesn’t define how he will do either of those two things. Tax breaks for employer-provided health insurance, mortgage interest, 401(k) accounts, state and local taxes, and charitable giving are popular and if these breaks are not cut, there is litttle else to cut that would raise significant revenue.

Besides the unconvincing vagueness of how Ryan would make up lost revenue in his plan, tax analyst groups see his proposed tax plan as heavily skewed toward the superwealthy — or “job creators,” as Ryan calls them. A recent Tax Policy Center study finds those earning over $1 million with tax cuts averaging $175,000; those earning between $75,000 and $100,000 with an average tax cut of $1,800; and those earning under $30,000 with an average tax increase of $130. The Center for Budget and Policy Priorities calculates that the Ryan tax plan would cut the tax rate paid by the wealthiest Americans and corporations by nearly 30 percent.

The Congressional Budget Office says that the Ryan plan would not balance the federal budget until about 2040. The main reason for this is that the new tax rates would start soon and the cuts in social programs — mainly Medicare and Medicaid — would kick in 10 years later. Given the many variables that affect the federal government budget, any plan that intends to balance the federal budget three decades from now should be treated as pie-in-the-sky.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s