Speaker Paul Ryan (R-Wis.) rolled out a tax plan Friday, the last major initiative from a set of six task forces. Regrettably it was swamped by Brexit news and a tailspin in world economic markets. (Donald Trump cheers others’ misery of course, saying as the British pound collapses more people will come to his Scottish golf course. What a guy.) It’s unfortunate that Ryan’s plan won’t get the attention it deserves, especially since it marks some surprising changes from past conservative tax plans (although liberal critics again didn’t read carefully enough before leaping to condemn it).

The basics of the plan, as The Post reports:

  • Cut the top individual tax rate from 39.6 to 33 percent. The plan would also streamline the number of tax brackets from seven to three — 12, 15 and 33 percent.
  • Replace itemized deductions with a higher standard deduction. The plan would cut most individual tax breaks and benefits except the earned income tax credit and deductions for mortgage interest, charitable giving and education expenses. Republicans would instead increase the standard deduction to $12,000 from $6,300 for single individuals and to $18,000 for single individuals with a child. Married couples filing jointly would see their deduction increase to $24,000 from $12,600.
  • Postcard-sized tax returns. The plan pledges to allow most individuals to file their taxes on a form the size of a postcard, an idea that became popular during the GOP primary debates earlier this year.
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  • Eliminate the alternative minimum tax and the estate tax.
  • Cut tax rates on investment income. Investment income is currently taxed at a top rate of 20 percent — lower than the top rate for ordinary income. The GOP plan would further reduce that rate by allowing taxpayers to deduct 50 percent of their net capital gains, dividends and interest income. That would create a new rate structure of 6 percent, 12.5 percent and 16.5 percent.
  • Increase the child tax credit. The proposal would streamline existing child credits into a single $1,500 credit and a $500 credit for non-child dependents.

For corporations, the plan reduces the corporate tax rate from 35 percent to 20 percent to make it internationally competitive, allow full expensing of capital investments and moves to a territorial system where operations overseas are not double taxed (i.e., by the United States and the locality) as other countries do.

The plan is not scored, so we do not know if it is revenue neutral. Several things struck me:

The most important number is the “3,” the first digit in the top individual tax rate. Aides familiar with the task force’s work tell me it is intended to maintain the code’s progressivity. “If you want to be revenue neutral and you don’t want to raise taxes on low- and middle-income groups, then the high income group needs a rate that starts with 3.” That’s economically smart insofar as it diminishes the revenue loss and goes some way in counteracting the perennial liberal complaint that this is a giveaway to the rich. (Compare it to the Trump plan which loses $10 trillion and gives the rich a huge tax break.) If there is a way to describe the plan it might be “modest.” That’s in keeping with the cautious tone in many of the Ryan policy initiatives on education, regulation and other topics.

Since this is presumably a document that would need to be negotiated not only by GOP committee chairmen but also with Democrats, we might finally be able to reach a compromise with corporate tax reform and cuts for lower- and middle-income taxpayers.

While the plan is generally in keeping with supply-side principles (broaden the base, lower the rates, promote work and investment) it also contains a number of provisions — expanding the child tax credit and raising the standard deduction — that benefit primarily lower- and middle-income Americans. It’s some recognition that a pure supply-side plan is not politically viable. Unfortunately, the task force punted on the earned income tax credit (“The Committee on Ways and Means will continue to work to reform the EITC to reduce fraud and erroneous overpayments. In addition, the Committee will develop options for providing a more effective and efficient incentive to work.”) The EITC can be a conservative alternative to minimum wage hikes, but only if Republicans are willing to lay out concrete plans.

While the plan differs from the pie in the sky tax plans we see in GOP presidential election platforms, it still drew praise from Americans for Tax Reform. (“This pro-growth plan cuts taxes for ALL American families and businesses, simplifies the code, promotes strong economic growth, and allows our businesses to better compete against foreign competitors.”)

The plan also takes small businesses out of the individual tax code and taxes them at 25 percent (higher than the highest corporate tax rate but lower than the top individual 33 percent rate). Since we are no longer talking about protecting small business there is further reason not to lower the top marginal rate.

Finally, it retains the mortgage interest, charitable giving and retirement savings deductions. How much revenue is lost as a result and whether and how much they should phase out is another topic for discussion. Given the GOP’s approach to health care, it also retains the “the exclusion for employer-provided health insurance and related health provisions in the tax code (such as health savings accounts and flexible spending arrangements)” and would presumably allow for the refundable tax credit for those purchasing their own insurance plans.

This is a promising starting point and constitutes an effort, as the other policy plans did, to put forth real-world, viable ideas that have broad appeal. Ryan wanted to give members of Congress a sane policy agenda on which to run this year. In that sense, he succeeded. Nevertheless, it underscores the missed opportunity for Republicans. A sober-minded, reasonable nominee might have actually agreed with some or all of Ryan’s ideas and had a chance to get elected. Instead the GOP picked Trump, and the next president in all likelihood with be a liberal Democrat. It’s a blunder of historic proportions.