Our guest blogger is Michael Linden, Associate Director of Tax and Budget Policy at the Center for American Progress Action Fund.
Before we all get too weak-kneed over House Budget Committee Chairman Paul Ryan’s (R-WI) “courageous” budget, let’s take a quick look at the tax side of the ledger. Ryan uses boilerplate language and topline bullet points to obscure an important fact: his plan would almost certainly raise taxes on most middle-income people.
Here’s what we do know. Ryan’s plan would:
— Maintain the Bush tax cuts, and further, cut the top individual tax rate down to 25 percent from 35 percent;
— Consolidate the current six tax brackets into some, unspecified, fewer number of brackets;
— Keep overall revenue levels the same;
— Pay for the enormous tax cut for the top by eliminating or curtailing some, unspecified, tax expenditures.
But without the missing details — which brackets are going to be consolidated, what the new rate structure will be, which tax expenditures will be eliminated, which will be limited and how — this is nothing more than pure boilerplate.
That’s probably on purpose, since any detailed description of his ideas for tax “reform” would reveal a massive middle class tax hike. For Ryan to cut the top rate by nearly one-third and still keep revenue the same as it would have been under the Bush tax cuts regime, he has to raise taxes somewhere else. And though he pointedly refuses to tell us where those tax hikes will come from, we can make an educated guess.
For one thing, the basic math makes a middle class tax hike unavoidable. The rate cut at the top, of course, benefits only those in the top brackets (the richest 2 percent of Americans), but to pay for it, Ryan says he will “broaden the tax base.” Broadening the tax base means removing some tax expenditures that currently benefit the middle class – the rich too, but they’re getting a huge rate cut. For another, Ryan’s previous budget plan, the “Roadmap for America’s Future” includes a massive tax cut for the rich paid for by an equally massive tax increase for the middle class.
Ryan’s “reform” of the tax code is long on rhetoric and short on details. It would almost certainly mean a huge tax increase for the middle class in order to pay for a huge tax cut — another one — for the rich. But Ryan doesn’t come right out and say that. Instead he obfuscates, and leaves his plan deliberately vague.