The major papers are abuzz today with details of House Budget Committee Chairman Paul Ryan’s (R-WI), including his plan to voucherize Medicare and drastically cut Medicaid by turning it into a block grant program. Ryan estimates that the GOP budget will reduce government spending by more than $4 trillion over the next decade.
During an appearance on Fox News Sunday yesterday, Ryan also said that the budget will include some sort of tax reform:
Well, the president’s commission, which I was a member of, first and foremost said to have economic growth in America, you need to lower tax rates for corporations and individuals and broaden the tax base. We will be recommending those kinds of things.
Ryan didn’t reveal the details during the interview, but the Wall Street Journal reported today that the plan will reduce both the top marginal income tax rate and the corporate income tax rate by 10 points:
Conservative activists who are familiar with the Ryan plan said they expect it to call for a fundamental overhaul of the tax system, with a 25% top rate for both individuals and corporations, compared to the current 35% top rate. It is expected to raise about the same amount of money as the current system, however. Lawmakers already are considering ways to accomplish that by reducing or eliminating some deductions and other tax breaks.
The details of this will, of course, become much clearer tomorrow, but it’s worth remembering that Ryan’s “Roadmap for America’s Future” includes a reworking of the tax system that dramatically cuts taxes for the rich, raises taxes on 90 percent of the population, and still manages to cost the government trillions of dollars in revenue.
For the House Republican budget to raise the same amount of revenue while lopping ten points off of the top income tax rate means that the tax burden is necessarily going to be shifted down the income scale. Ryan yesterday also refused to endorse cutting taxpayer subsidies to oil and gas companies, calling into question the GOP’s commitment to actually pairing a cut in the corporate tax rate with the elimination of loopholes and giveaways in order to raise the same amount of revenue through the corporate tax code.