Paul Ryan is a Wisconsin Republican and a rising star in the party. He’s the ranking member of the House Budget Committee and several weeks ago he unveiled his plan for balancing the budget. It was a Republican plan on steroids – huge tax cuts for the wealthy, elimination of Social Security and Medicare and replacement of them with vouchers. A group called the Center on Budget and Policy Priorities examined Ryan’s budget and found it’s worse than we thought:
The tax cuts for those at the very top would be of historic proportions. A new analysis by the Urban Institute-Brookings Institution Tax Policy Center (TPC) finds:
- The Ryan plan would cut in half the taxes of the richest 1 percent of Americans — those with incomes exceeding $633,000 (in 2009 dollars) in 2014.
- The higher one goes up the income scale, the more massive the tax cuts would be. Households with incomes of more than $1 million would receive an average annual tax cut of $502,000.
- The richest one-tenth of 1 percent of Americans — those whose incomes exceed $2.9 million a year — would receive an average tax cut of $1.7 million a year. These tax cuts would be on top of those that high-income households would get from making the Bush tax cuts, which are due to expire at the end of 2010, permanent.
To offset some of the cost of these massive tax cuts, the Ryan plan would place a new consumption tax on most goods and services, a measure that would increase taxes on most low- and middle-income families. TPC finds that:
- About three-quarters of Americans — those with incomes between $20,000 and $200,000 — would face tax increases. For example, households with incomes between $50,000 and $75,000 would face an average tax increase of $900. (These estimated changes in taxes are relative to the taxes that would be paid under a continuation of current policy — i.e., what tax liabilities would be if the President and Congress make permanent the expiring 2001 and 2003 tax cuts and relief from the alternative minimum tax.)
The plan would shift tax burdens so substantially from the wealthy to the middle class that people with incomes over $1 million would face much lower effective tax rates than middle-income families would. That is, they would pay much smaller percentages of their income in federal taxes.
The Republicans will call this a tax cut because overall tax revenue will be smaller. Because of the massive tax cuts in this plan, it doesn’t even begin to address the deficit for 50 years – long after Paul Ryan and the Republicans that would vote for this plan have left office. It’s the culmination of 30 years of magical Republican thinking, which in reality rewards wealth over work. I doubt this plan will go anywhere but people should know – this is what the Republicans want to do when they talk about taxes and entitlements.