When Rep. Paul Ryan (R-WI) recently released his Roadmap for America’s Future — a plan which purports to balance the federal budget over the next few decades without tax increases — conservatives leapt to embrace it. “I think it’s fabulous, it’s a great template for everyone that’s not just relying on smoke and mirrors,” said former Congressional Budget Office Director and McCain adviser Douglas Holtz-Eakin. “Halting America’s slide into bankruptcy and economic stagnation will require bold solutions like Rep. Ryan’s Roadmap for America’s Future,” added Rep. Tom Price (R-GA).
The plan relies on essentially privatizing Social Security and Medicare, while at the same time repealing the estate and corporate taxes and instituting a national sales tax (akin to a value-added-tax) of 8.5 percent. And while no marginal tax rates would be increased, according to a new report, the design of the plan and the taxes that Ryan leans on would shift the tax burden down the income scale, resulting in an overwhelming majority of Americans ultimately paying more in taxes than they do would under President Obama’s plans. Citizens for Tax Justice (CTJ) ran the numbers and found that under Ryan’s proposal:
– Federal taxes would be lower for the richest 10 percent, and higher for all other income groups, than they would be if President Obama’s proposals were enacted.
– The bottom 80 percent of taxpayers would pay about $1,700 more, on average, than they would if President Obama’s proposals were enacted.
– The richest one percent would pay about $211,300 less on average than they would if President Obama’s proposals were enacted.
– The poorest 20 percent would pay 12.3 percent of their income more than what they would pay under the President’s proposal, while the richest one percent would pay 15 percent of their income less than they would pay under the President’s proposal.
This shift in tax burden not only would force the middle- and lower-classes to pony up far more than the rich, but it would also result in the government collecting $2 trillion less over a decade than it otherwise would have. “It’s difficult to design a tax plan that will lose $2 trillion over a decade even while requiring 90 percent of taxpayers to pay more. But Congressman Ryan has met that daunting challenge,” CTJ wrote.
We’re already in an era in which the difference in tax burden between the wealthy and the middle class is smaller than at any time in history. Plus, as recently released IRS data shows, at the peak of the last economic cycle (2007) incomes for the top 400 households were at a record high while the taxes that they paid fell to a record low. (Of course, we would have known this earlier if the Bush administration hadn’t blocked access to the data on the top 400 taxpayers, which Obama once again opened up.) Ryan’s plan would exacerbate these trends.
To his credit, Ryan does try to grapple with long-term deficits (unlike most Republicans) and the Roadmap is a terrifyingly honest assessment of conservative priorities. But to take an already inequitable system and shift the burden further down is completely unacceptable, and it shows what passes for “fabulous” and “bold” in conservatives circles.