Ryan Would Shift the Fiscal Burden to Low and Middle-Income Households

By :: March 27th, 2012

The budget proposal House Budget Committee Chairman  Paul Ryan (R-WI) released last week  is, essentially, an effort to have low- and middle-class households bear the entire burden of closing the fiscal gap and bear the costs of financing an additional tax cut for high income households. 

The Tax Policy Center (which I co-direct) analyzed the revenue policies as proposed by Rep. Ryan. We simulated the effects of repealing the AMT and reducing ordinary income tax rates to 10 and 25 percent.  These proposals would cost about $3.2 trillion over ten years, on top of the $0.3 trillion lost from repealing taxes enacted to pay for Affordable Care Act, the $1.1 trillion lost from his desired reduction in the corporate tax rate, and the $5.4 trillion lost from first extending the Bush-Obama tax cuts (which he also supports). By 2022, the tax policies he has specified would lower federal revenues to just 15.8 percent of GDP.  Talk about digging yourself a hole.

Ryan claims he can fill this hole by eliminating tax breaks, which he correctly identifies as “spending through the tax code.” At first glance, this sounds like a step in the right direction: broaden the base and lower rates. Yet, like many recent proposals, the devil is in the details.  Ryan never specifies which specific tax expenditures he would cut.

At a time when our country faces a daunting fiscal challenge, Ryan asks nothing of the wealthiest Americans. His budget proposal would simultaneously cut tax rates for the rich and corporations while slashing programs for the poor and elderly: he would shift many federal low-income assistance programs to state governments and would transform Medicare into a premium support system that will shift health care costs to seniors if health care inflation cannot be controlled.  

Although I agree that spending cuts are necessary to meet our fiscal challenges, so too are additional revenues, for many reasons.  They are the only way to get shared sacrifice from the wealthiest Americans.  They could reduce the draconian spending cuts that Ryan proposes.  Until he specifies which popular tax breaks he would eliminate, the Republican’s budget is clearly a win for the rich and a loss for everyone else.

Lastly, it is worth highlighting that  Ryan is gaming the system in creating budget estimates. His  budget proposal is too vague to be scored, so he simply told the Congressional Budget Office to determine the effect of his budget proposal **assuming** the proposal achieves its stated goals for spending and revenues. This is not the same as the usual approach – which involves asking CBO to determine whether the proposal actually achieves its stated goals. Instead, Ryan dictates the assumptions he wants and walks away with a seemingly favorable CBO report.  This is smoke and mirrors. Ryan may not be the only politician to use the system this way, but that doesn’t make his actions any more forthright or reveal anything informative about this plan.

 

 

54Comments

  1. Michael Bindner  ::  5:13 pm on March 27th, 2012:

    Ryan is simply off-loading the pain of deciding what tax breaks go away to Ways and Means, as is appropriate. His budget is a negotiating position, likely with a 25% tax rate on capital gains, income, dividends, corporations – with the President holding at 28% for all of the above. I expect the answer to be 27%. Ryan knows, or should know, that he has to eventually give a bit more because Obama could bring back the entire mix of Clinton tax rates by doing nothing and Ryan can’t stop him.

  2. Ralph H  ::  11:53 am on March 28th, 2012:

    A few points. (1) While there is valid criticism in the lack of specifics, any specifics are immediately seized on by the opposition (as was the original Ryan plan). (2) With the exception of the Simpson-Bowles Plan, there is a singular lack of any solution being proposed, and S-B was dismissed by the president rather quickly. (3) The ongoing problem is in entitlemnts, and in particular to those who have not paid for them due to their low tax rate; thus to solve the problem payments likely have to be controlled.

    Personally, unless there is significant reduction in payments to those who have not contribute to tax revenues, I would resist any tax increases. I also reject the concept that deductions are “tax expenditures”. The way I see it, the statutory rate is too high at 35% so any deductions in effect lower it to a more reasonable rate (like 25%). If Ryan trades off the two by limiting or ending deductions and lowering the rate more power to him.

    If there is to be any bipartisan agreement, Mr Ryan will be an important participant, so it is not a good idea to trash him.

  3. AMTbuff  ::  12:25 pm on March 28th, 2012:

    The government needs to break its promises to some combination of bondholders and beneficiary recipients. Middle class recipients will inevitably constitute most of those affected. There is no scenario in which the middle class can be protected. Only the lower class can be protected if the middle class is willing to cover for them, a politically doubtful proposition.

    It’s mathematically impossible for the rich to bear most of the burden of closing the fiscal gap. There’s not enough money is raising their taxes to the sky and cutting off all their promised benefits.

  4. Michael Bindner  ::  5:02 pm on March 28th, 2012:

    No, it needs to break its promises to not raise taxes.

  5. Michael Bindner  ::  5:04 pm on March 28th, 2012:

    S-B was actually mostly adopted by the President, especially the balanced approach and tax reform structures and the need for tax reform to be revenue generating at $150 billion a year, rather than revenue neutral.

  6. AMTbuff  ::  6:15 pm on March 28th, 2012:

    Michael, all the tax increases you can dream up will not close the long-term fiscal gap detailed in Appendix A of http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/115xx/doc11579/06-30-ltbo.pdf

    As a matter of mathematics, unless the curve for government health care spending can be made completely flat, tax revenues at any level will eventually be exhausted. Unless you have a way to tax all the Chinese, then space aliens within an ever-expanding sphere of conquest.

  7. Tax Roundup, 3/29/12 « Roth & Company, P.C  ::  9:12 am on March 29th, 2012:

    […] Gale at Tax Vox says Ryan Would Shift the Fiscal Burden to Low and Middle-Income Households.  News flash, William: the Rich Guy isn’t […]

  8. Ralph H  ::  9:14 am on March 29th, 2012:

    I disagree. The administration has proposed only high income earner tax increases while cxontinuing the givaway to all in the form of the temporary SSI tax break.

  9. Steve Baxley  ::  8:54 am on March 30th, 2012:

    I am wondering if this plan takes the same approach as the prior “Roadmap for America’s Future” with respect to the taxation of interest, dividends and capital gains. The prior plan called for elimination of double taxation by removing these investment income items from the individual tax base. Page 51 in the “Path to Prosperity” suggests that tax reform should promote savings and investment and that raising taxes on capital is a bad idea, but I don’t see a specific provision on the tax rate (or lack thereof) on interest, dividends and capital gains.

  10. "Grim Reality": Media Misses The Point Of The Buffett Rule Fight | FavStocks  ::  3:48 am on April 13th, 2012:

    […] appear determined to write. As a contributor to TaxVox, the Tax Policy Center blog, he wrote a post sharply critical of the House Republican budget plan written by Rep. Paul Ryan, R-Wisc. At a time when our country faces a daunting fiscal challenge, […]

  11. Brenna Dull  ::  2:31 pm on July 6th, 2012:

    I really can’t see the need for all businesses to get involved with social media…like who is going to want to follow what their Accountant is up to?

  12. meverline  ::  10:12 pm on August 14th, 2012:

    How about starting with removing all the give a ways to bossiness in the from of tax breaks to keep the pain even just remove them all the gets about 1.2 Trillion. I thinks is a good start.

  13. Grim Reality Media Misses The Point Of The Buffett Rule Fight – Isaiah J. Poole  ::  12:53 am on December 22nd, 2012:

    […] appear determined to write. As a contributor to TaxVox, the Tax Policy Center blog, he wrote a post sharply critical of the House Republican budget plan written by Rep. Paul Ryan, R-Wisc. At a time when our country faces a daunting fiscal challenge, […]

  14. lancel premier flirt  ::  1:09 pm on April 16th, 2013:

    When it concerns gaming face-to-face with a considerable, noisy crowd, you apparent headset that can block outer noise¡­

  15. Janae  ::  7:24 pm on August 19th, 2014:

    Inghists like this liven things up around here.

  16. What the GOP gets right about Obama’s tax reform plan | Jay Bookman  ::  9:56 am on January 20th, 2015:

    […] The Tax Policy Center, which analyzed the Ryan proposal, calls it “essentially, an effort to have low- and middle-class households bear the entire burden of closing the fiscal gap and bear the costs of financing an additional tax cut for high income households.” […]

  17. sildenafil  ::  1:22 pm on February 19th, 2015:

    In the complicated world we live in, it’s good to find simple solutions.

  18. Tadalafil  ::  2:57 pm on February 19th, 2015:

    It’s imperative that more people make this exact point.

  19. Gody  ::  8:47 pm on February 23rd, 2015:

    I find this site interesting. There is an optpnourity upcoming with Kindler’s retirement. There is an optpnourity to get a fiscally responsible Superintendant. We must make sure the school board advertises externally and does not do another internal hire! This is just as crucial as getting fiscally responsible people on the School Board.Secondly, if you want this site to be part of the solution, there must be alternatives offered not just complaints.Just my thoughts.

  20. sildenafil  ::  7:53 am on February 25th, 2015:

    That’s not even 10 minutes well spent!

  21. male impotence  ::  11:52 am on March 24th, 2015:

    BION I’m impressed! Cool post!

  22. sildenafil  ::  4:07 am on March 26th, 2015:

    I don’t even know what to say, this made things so much easier!

  23. Tadalafil  ::  9:21 am on March 26th, 2015:

    That’s not just the best answer. It’s the bestest answer!

  24. cheap insurance  ::  6:16 am on April 4th, 2015:

    I guess finding useful, reliable information on the internet isn’t hopeless after all.

  25. sildenafil  ::  8:26 pm on April 4th, 2015:

    Essays like this are so important to broadening people’s horizons.

  26. auto insurance  ::  1:52 pm on April 5th, 2015:

    The ability to think like that shows you’re an expert

  27. auto insurance Columbia  ::  9:34 pm on April 7th, 2015:

    I’m impressed. You’ve really raised the bar with that.

  28. levitra  ::  5:34 pm on April 8th, 2015:

    I’m impressed, I need to say. Really not often do I encounter a blog that’s each educative and entertaining, and let me inform you, you have got hit the nail on the head. Your concept is outstanding; the difficulty is one thing that not sufficient people are speaking intelligently about. I’m very blissful that I stumbled throughout this in my seek for something regarding this.

  29. levitra  ::  8:19 am on April 10th, 2015:

    Okay I’m convinced. Let’s put it to action.

  30. Yunita  ::  10:43 am on April 10th, 2015:

    Good job Pete. The spending is out of hand and tax irnseace is not the solution. Especially for the elderly of our community on fixed incomes who can’t afford tax irnseaces. I would like a couple signs for 116 S 18th St please. Any any info/pamphlets to possibly help. Thanks .

  31. cheap levitra  ::  10:29 pm on April 10th, 2015:

    dimitrichka shishkova казва:napalno sam ubedena 4e sokat ot 4erveno cveklo svalq kravnoto nalqgane. sprq lekarstvata za kravno nalqgane i vseki den pieh sok ot 4erveno cveklo, luk morkovi i kartof no tova e li4no moq recepta i se 4uvstvah mnogo dobre sega minah na 4ai, no sutrin vinagi imam povisheni stoinosti. Mnogo vi mola ako imate tazi vazmonost da mi kagete neshto koeto deistva kato panaceq s pozdrav Shishkova

  32. life insurance quotes  ::  12:54 pm on April 11th, 2015:

    The "We built this party" has nominated a man whose fortune is built on a business model built on tax code changes. They used these changes to pocket profits while under huge debt, sinking many companies (and jobs) along the way to the Swiss Bank. Whether at Baine, the Olympics, or as a politician – the only thing Willard is good at is collecting rich people and government money.

  33. auto insurance qoutes Philadelphia  ::  10:38 pm on April 11th, 2015:

    – Erica really took the time to get to know us and that made things a lot easier. She has a very artistic eye and does things no other photographer would think of. The best part is how natural it was to have her taking photos without us even knowing she was there. A+++

  34. ND auto insurance  ::  12:47 pm on April 12th, 2015:

    It’s great to find an expert who can explain things so well

  35. New Orleans auto insurance  ::  2:12 am on April 13th, 2015:

    The Zune shiny blue mittens free concentrates on being a Portable Media Player. Not a web browser. Not a game machine. Maybe in the future it’ll do even better in those areas, but for now it’s a fantastic way to organize and listen to your music and videos, and is without peer in that regard. The iPod’s strengths are its web browsing and apps. If those sound more compelling, perhaps it is your best choice.

  36. cheap insurance  ::  6:12 pm on April 14th, 2015:

    It’s always a pleasure to hear from someone with expertise.

  37. life insurance quotes  ::  12:42 pm on April 17th, 2015:

    Glad I’ve finally found something I agree with!

  38. levitra  ::  9:18 am on April 18th, 2015:

    Until I found this I thought I’d have to spend the day inside.

  39. auto insurance  ::  3:39 pm on April 19th, 2015:

    AFAIC that’s the best answer so far!

  40. online courses  ::  1:45 pm on April 20th, 2015:

    Mariau, visiškai su tavimi nesutinku. Jeigu žurnalistu laikai žmogų, kuris renka, analizuoja, apibendrina ir pateikia viešai informaciją, tai žurnalisto etiketes galima užkabinti ir politikams, jų patarėjams, bankų analitikams, sociologams, mokslo darbus rašantiems magistrantams, doktorantams, viešųjų ryšių atstovams.Reklaminiai tekstai yra reklaminiai tekstai. Taip, juos žurnalistai kartais (dažnai) rašo, taip, žiniasklaidos priemonės kartais (dažnai) juos spausdina, publikuoja, bet tai yra nukrypimas, o ne taisyklė. Šiaip jau, žurnalistas, kuris rašo reklaminį straipsnį, jau pakliūva į interesų konfliktą, nes jo pareiga – objektyviai informuoti visuomenę, pasinaudojant visokeriopa informacija (ir nevieša), atskleisti reiškinius, blogybes.Tavo minimas pareigų ir atstovaujamos įmonės nurodymas yra ne reklama, o skaidrumas. Gali visada rašyti, kad “vienos įmonės vadovas”, bet tada straipsnio patikimumas mažėja.

  41. online college courses  ::  6:20 pm on April 20th, 2015:

    I’m not easily impressed. . . but that’s impressing me! :)

  42. auto insurance  ::  3:23 pm on April 21st, 2015:

    Well done article that. I’ll make sure to use it wisely.

  43. cheap insurance  ::  4:02 am on April 22nd, 2015:

    You mean I don’t have to pay for expert advice like this anymore?!

  44. whole life insurance  ::  12:04 pm on April 23rd, 2015:

    Promoting Health Among Teens (PHAT)comes in two versions: one is Abstinence-Only and the other is Comprehensive. Jean is right: the A-O version was proven effective in delaying sexual initiation. It is a great fit for younger teens in earlier middle school grades. Of course we would also expect that in the later grades those same students receive education that is comprehensive, including information about condoms and birth control. It is good to finally have an A-O curriculum that isn’t shame or fear based and provides medically accurate information!

  45. home owners insurance  ::  12:51 pm on April 23rd, 2015:

    What’s it take to become a sublime expounder of prose like yourself?

  46. propecia  ::  1:42 pm on April 27th, 2015:

    Your answer was just what I needed. It’s made my day!

  47. online colleges  ::  10:59 am on April 29th, 2015:

    That’s not just logic. That’s really sensible.

  48. amoxicillin  ::  4:07 pm on April 29th, 2015:

    That’s what we’ve all been waiting for! Great posting!

  49. cheap propecia  ::  11:41 am on May 1st, 2015:

    That’s not even 10 minutes well spent!

  50. assignment writing  ::  9:52 am on May 8th, 2015:

    That’s a knowing answer to a difficult question

  51. write my essay  ::  10:07 pm on May 8th, 2015:

    That’s really thinking at an impressive level

  52. term paper writing  ::  8:03 pm on May 10th, 2015:

    Finding this post. It’s just a big piece of luck for me.

  53. write my essay  ::  10:48 am on May 11th, 2015:

    Thanks for your thoughts. It’s helped me a lot.

  54. rental cars Italy  ::  5:25 pm on May 14th, 2015:

    Such an impressive answer! You’ve beaten us all with that!