The budget unveiled by House Budget Committee Chairman Paul Ryan (R-WI) this morning includes substantial changes to the American tax code, both for corporations and individuals. Ryan’s tax plan shrinks the number of income tax brackets from six to two, with marginal tax rates set at 10 percent and 25 percent. He repeals the Alternative Minimum Tax (AMT), slices the top corporate tax rate to 25 percent, and repeals all of the health care taxes contained in the Affordable Care Act. It also repeals the repatriation tax on profits corporations earn overseas then bring back to the United States.
In all, those tax breaks amount to a $3 trillion giveaway to the richest Americans and corporations, according to the Tax Policy Center. Repealing the repatriation tax would add roughly $130 billion to that.
This morning on MSNBC’s Morning Joe, Ryan insisted that the plan would generate the same amount of revenue as the government currently receives. In true Ryan form, though, he wouldn’t say how:
RYAN: We’re taking the tax system and reforming it along the way this new bipartisan compromise and consensus is showing. Get rid of the special interest loopholes, special deductions, lower everybody’s tax rates, bring in at least as much revenue to the government but grow the economy and create jobs, and get spending under control so we can pay off this debt.
SCARBOROUGH: So you say that you want to bring as much revenue into the government even with lower tax rates. There are obviously only a few ways to do that as far as eliminating tax loopholes, whether you’re talking about the home mortgage loophole, the health care loophole, or the charitable interest deductions. Which one of those do you eliminate?
RYAN: We want to do this in the light of day and in front of everybody. So the Ways and Means Committee, which is in charge of the tax system, sent us the plan here, which is a 10 and 25 percent bracket for individuals and small businesses, and then they want to have hearings and, in light of day, show how they would go about doing this.
The taxes Ryan wants to repeal all primarily impact the richest Americans and corporations. Repealing the repatriation tax, as Republicans have attempted multiple times since taking control of the House in 2011, amounts to a huge giveaway to corporations. And ending the AMT and investment taxes from the ACA while dropping the top income tax rate would give massive tax breaks to the rich. That isn’t surprising — it’s virtually identical to what Ryan attempted in last year’s budget, which he called the “Path to Prosperity.”
Ryan’s plan for income taxes, meanwhile, is similar to GOP presidential candidate Rick Santorum’s, and the Tax Policy Center found that his plan would reduce total federal revenues by $900 billion a year. Though Ryan offered no specifics, it’s clear that to avoid blowing a hole in the federal budget, the GOP will have to make up lost revenue by raising taxes on the poor and middle class (or by ending tax breaks that primarily benefit them) or by taking the axe to vital safety net programs that the poorest Americans — including women, infants, and children — depend on the most. Again, that shouldn’t be surprising — this edition of Ryan’s plan is simply a worse version of last year’s “Path to the Poorhouse.”