Our guest blogger is Seth Hanlon, Director of Fiscal Reform at the Center for American Progress Action Fund.
The House of Representatives will likely vote today to establish a fast-track process for enacting the tax plan outlined in the House Republican budget, which was authored by Budget Committee Chairman Paul Ryan (R-WI). Ryan’s tax reform plan would guarantee massive tax cuts for the wealthy and for corporations, while purporting to hold revenues constant. Therefore, the only way it adds up is with a major middle-class tax increase.
The “tax reform” that Ryan and House Ways and Means Chairman Dave Camp (R-MI) will try to fast-track through the House is almost the same as presidential candidate Mitt Romney’s tax plan. It slashes tax rates paid by the highest-income Americans and corporations, while protecting the tax preferences for investment income that result in people like Romney paying a lower tax rate than many in the middle-class.
It also gives millionaires a tax cut of a quarter of a million dollars. It cuts corporate taxes by more than $1 trillion and gives them new incentives for offshoring jobs. And it purports to be “revenue-neutral” — which means that the middle-class is left to meet the cost of rich people’s tax cuts.
As a study from the nonpartisan Tax Policy Center revealed yesterday, Romney’s plan would raise taxes on middle-class families with children by an average of $2,000 and raise taxes on all taxpayers with incomes under $200,000 by an average of $500. (Those estimates are conservative: In filling in missing details, TPC bent over backwards to make Romney’s plan as kind to the middle class as possible, given the hard promises he has made on tax cuts for the rich and corporations.)
A middle-class tax increase is inevitable under Romney’s plan because it’s impossible to pay for Romney’s tax cuts for the rich by reducing their tax breaks. As a result, the TPC study finds, Romney’s plan “mathematically necessitates a shift in the tax burden of at least $86 billion away from high-income taxpayers onto lower- and middle-income taxpayers.”
Ryan and his Republican colleagues use the same sleights of hand that Romney used in trying to hide their middle-class tax hike, including refusing to disclose any information about fundamental elements of their plan like what tax benefits would be eliminated. But the math doesn’t lie: Any tax plan that purports to hold revenues steady while massively cutting taxes for the rich must make up the lost revenue by raising taxes on people who are not rich.