As part of both the GOP budget authored by House Budget Committee Chairman Paul Ryan (R-WI) and the “jobs plan” the House GOP released last week, the top income tax rate would be cut from 35 percent to 25 percent. But Ryan has been claiming that what looks like a massive tax cut for the rich is not, in fact, a tax cut for the rich, because the GOP will remove enough credits, deductions, and loopholes to make it all a wash.
“Nobody’s talking about cutting taxes for the rich. We’re talking about reforming the tax code, cleaning it up, keeping revenues where they are,” Ryan said. “We’re not talking about cutting taxes,” he said in a different appearance.
This is a very dubious assertion, as cutting the rate by so much would require significant cutting of tax deductions as well. We’ve noted that the GOP plan is likely to result in a tax cut for the rich alongside a massive tax hike on the middle class. House Ways and Means Ranking Member Sander Levin (D-MI) is thinking along similar lines, as he explained in a speech yesterday:
The approach advocated by House Republicans has been to simply announce that tax reform should achieve a top rate of 25 percent for both individuals and corporations, with no discussion whatsoever of what we would need to change and give up to achieve those rates. This is the equivalent of putting a blindfold on, spinning around three times, and picking a number. It’s time to take the blindfold off. It’s time to understand what that would mean for working families…To reduce the top marginal rate for the wealthiest people in this country to 25 percent, Republicans would need to eliminate many provisions that benefit — and indeed, helped build — the middle class of this country.
As Levin said in an interview with ThinkProgress, the GOP plan was simply to choose a new top rate and then take rule any additional revenue out of bounds, necessitating their middle-class tax increase:
It really isn’t a tax reform plan. There’s a number. Combined with this number is the statement “taxes are off the table.” So that means the high-income tax cut, according to the Republicans, will continue. The implication of that is a major loss of income [for the government]. And how’s it going to be made up? So they don’t really have a plan. They have a number and a firm position: ‘don’t talk revenues.’
Michael Linden has more on Ryan’s deliberately vague plan to raise middle-class taxes.