If some Republicans are squeamish about Rep. Paul Ryan’s proposal to privatize Social Security, there’s plenty of tax cuts for the rich included in the plan they might find more to their liking.
TPMDC has been scouring the “Roadmap for America’s Future” budget blueprint that Ryan, ranking Republican on the Budget Committee, proposed a few weeks ago. Among the nuggets that have GOPers running a bit scared are his plans to dramatically slash Social Security and Medicare benefits to cut the deficit.
Under the plan, Ryan (R-WI) also would give taxpayers a choice of a “simpler” system with just two tax brackets and he would repeal the corporate income tax. In its place he creates a “consumption tax” of 8.5 percent that experts tell us would unfairly burden the lower and middle classes. That’s a tax on all goods and services that shifts the tax burden from corporations to individual consumers.Ryan says the consumption tax for businesses will make it easier for the companies to “invest and create more jobs in the U.S.”
“By reforming the entire tax code and removing these upward pressures on taxes [such as the AMT], this plan offers greater certainty so taxpayers can better plan for their financial futures,” he wrote in the roadmap, which you can read here.
The roadmap has a GOP grab-bag of tax cuts, eliminating capital gains taxes, interest income taxes, the alternative minimum tax and estate tax Republicans dubbed the “death” tax. It also increases the standard deduction for tax filers.
“These are very, very dramatic changes in the tax code … likely to lose a tremendous amount of revenue,” said Jim Horney, director of federal fiscal policy for the Center on Budget and Policy Priorities (CBBP).
Horney noted that the Congressional Budget Office evaluation doesn’t take the revenue effects of the tax cuts into account. CBBP will be out soon with their own analysis.
However, the Ryan plan is remarkably similar to what then-presidential candidate Fred Thompson (R-TN) presented in 2007 before the GOP primary. That had the “biggest tax cut in American history,” and was a “huge reveune loser,” totaling between $5 trillion and $7 trillion, Horney said.
The consumption tax would raise revenues but doesn’t come anywhere close to offset the revenue lost from the tax cuts, Horney said.
Under the Ryan proposal, taxpayers could stick with the current tax plan or choose the “simplified” one which has just two brackets.
For example, a couple filing jointly would either fall in the $0-$100k range with a 10 percent tax rate or the $100k and above bracket with a 25 percent rate. The rate is 25 percent for single filers earning $50k or more.
That eliminates the current top three tax brackets for wealthier people.
“Lower rates reduce disincentives to work and increase earnings,” the roadmap proclaims.
Ryan writes in the roadmap the changes are to keep the federal tax burden at its current level.
Horney said he doesn’t see why many Republicans are backing away from the plan as a political hot potato, saying it’s consistent with policies they’ve supported for years.