In picking Paul Ryan, Mitt Romney has doubled down on his own campaign promise to give big tax breaks to the wealthy, uniting himself with a candidate who goes even further to do so: While Romney would bring taxes for top incomes down to 28 percent, Ryan has proposed bringing the top rate down even lower, to 25 percent. Meanwhile, Ryan’s plan would actually increase the effective tax rate on the very poorest Americans by getting rid of tax breaks that benefit low earners.
Under Ryan’s plan, the six tiers of tax rates would be simplified to two rates: 25 percent for higher earners and 10 percent for lower-earners. But the overall impact of the Ryan budget would still disproportionately benefit the wealthy. The top 20 percent would get a $13,907 tax cut in 2015, and the top 1 percent would get a whopping $155,808 tax break, according to an analysis by the Tax Policy Center. By contrast, the bottom 20 percent of Americans would pay $159 more in taxes in 2015.
That’s because the Ryan budget would get rid of tax breaks that benefit low-income Americans, including expansions of “the Earned Income Tax Credit, Child Tax Credit, and American Opportunity Tax Credit that were enacted in 2009,” according to the Center on Budget and Policy Priorities. As a result, effective tax rates on those with incomes than $30,000 would actually go up, while going down for the wealthy, the CBPP concludes:
Ryan says that he would also eliminate tax breaks for the wealthy, among others, to order to help pay for these rate cuts, which total almost $10 trillion, according to the CBPP. But he’s declined to specify which tax breaks for the rich he’d actually get rid of. Instead, “Ryan has said the House’s tax-writing Ways and Means Committee will sort that out later,” as Businessweek pointed out earlier this year. What’s more, Ryan actually wants to expand one of the biggest tax breaks that benefit the wealthy: He wants to eliminate taxes on capital gains, dividends, and interest. So it remains unclear how Ryan would ensure that $10 trillion in rate cuts wouldn’t explode the deficit.
In fact, Romney’s tax plan suffers from exactly the same policy gap: He has also refused to specify which tax breaks he’d get rid of to pay for big rate cuts that would disproportionately benefit the wealthy. When the Tax Policy Center tried to fill in the gaps, they found that Romney’s plan still gave big tax breaks to the wealthy while raising taxes on lower- and middle-income families. Both Romney and Ryan would also cut the corporate tax rate to 25 percent, also offset by getting rid of corporate tax breaks that neither will specify.
So the Ryan and Romney tax plans are cut from the same cloth: They both give big tax breaks to the wealthy without saying how they’d be offset. But Ryan’s plan makes the tax break for top incomes even bigger.