The Ryan Tax Plan: Higher Taxes for 90% of Americans, Less Revenue for the Government
Paul Ryan’s “budget roadmap” has terrified the GOP leadership, but thrilled conservative intellectuals with its calls for sharp cuts in Social Security, Medicare, Medicaid, defense, and all other government programs combined with privatization of Medicare so that a larger share of your diminished benefit goes to for-profit insurance companies. Less widely discussed is the tax aspects of Ryan’s plan. As you would expect from a conservative plan, compared to Barack Obama’s tax ideas Ryan would raise less government revenue. This is why he needs sharp cuts in Social Security, Medicare, Medicaid, defense, and all other government programs combined with privatization of Medicare so that a larger share of your diminished benefit goes to for-profit insurance companies.
The interesting thing, however, is that when the Center for Tax Justice (PDF) ran the numbers, they discovered that this isn’t the kind of tax cut that makes your taxes lower. On the contrary. Most Americans will pay higher taxes under Ryan’s plan than under Obama’s. Only the very richest will pay less. This table sums up the essence of the Ryan Ripoff:
So give Ryan credit. It’s quite difficult to raise taxes on 90 percent of Americans while reducing overall tax revenue, but he’s shown enormous ingenuity in getting the job done. Remember that this is the top House GOP budget guy. If John Boehner becomes Speaker after the midterms, Ryan will be writing budgets for the new majority, presumably animated by the same moral principles that led him to this idea.
85 Responses to “The Ryan Tax Plan: Higher Taxes for 90% of Americans, Less Revenue for the Government”
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March 10th, 2010 at 10:49 am
Children with matches, GOPers with budgets; same difference.
March 10th, 2010 at 10:51 am
Mindboggling. Were they always this shameless?
March 10th, 2010 at 10:55 am
The number for the bottom three quintiles is incorrect. Ryan’s plan grants them $2300 and $5700 each year for families and individuals, which easily offsets VAT.
Which means most of the bottom 60% continue to pay basically NOTHING to be a citizen.
Is Obama’s plan a bigger handout? Sure. That’s why it destroys our debt.
March 10th, 2010 at 10:57 am
Morgan, the fact that you think people should have to pay to be a citizen is one of the many reasons everyone thinks you are an idiot and a bad person. Just thought you should know.
March 10th, 2010 at 10:59 am
90% of people pay more taxes to receive reduced benefits and gutted services, and the top 5% get to pay way less taxes. Obviously this is the best way to fund and operate the federal government.
March 10th, 2010 at 11:00 am
While I agree with your overall critique, I think it is only fair to observe that ANY attempt — whether it is written by Democrats or Republicans — to bring US revenues and expenditures into alignment is going to result in increased taxation on the bottom 80% of Americans.
March 10th, 2010 at 11:01 am
But it doesn’t offset the eliminated of the Earned Income Tax Credit.
March 10th, 2010 at 11:02 am
how much should they be required to pay ?
March 10th, 2010 at 11:03 am
Uhh, last I checked, payment of income taxes was not a requirement for citizenship.
Or did I miss that clause in the constitution?
March 10th, 2010 at 11:06 am
There are a bunch of disingenuous aspects to Ryan’s plan, but isn’t this a bit of an apples to oranges comparison, Matt? Obama isn’t proposing to raise taxes this high, but he’s also not proposing to eliminate the deficit, either. The only way to do that is to raise taxes, cut programs, or some combination of the two.
I think Democratic deficit reduction would not be geared toward the destruction of the social safety net (and Ryan’s plan doesn’t really make hard calls in important places, which makes it almost a non-starter), but if Obama were to tackle the same problem that Ryan is professing to address here, his tax burden would probably be significantly higher.
Granted, it’s rich to listen to “anti-tax” Republicans proposing to raise taxes while dramatically cutting the size of government (and that’s one reason this plan would never, never fly with the public), but Ryan isn’t hiding behind tax cuts in this one. His whole focus is ostensibly deficit reduction, so the fact that taxes go up isn’t particularly surprising, and it certainly isn’t a sign of typical Republican hypocrisy. Rather, it’s a revealing picture of the Republican idea of the future.
March 10th, 2010 at 11:07 am
Wait a second- you mean repealing the Bush tax cuts is a tax increase?
March 10th, 2010 at 11:10 am
Pketzle, did you completely miss the point of this post? It wasn’t that he proposes raising taxes on the bottom 90%, it was that he proposes that while simultaneously slashing taxes at the top.
March 10th, 2010 at 11:11 am
This is an excellent post. People should be repeating the mantra of “raise taxes on 90% of Americans” as often as possible. I’m really glad Matt posted this, and I kind of feel bad now for calling him a hack who works for a lobbying outfit.
Also,there’s no point in responding to Morgan. At first I tried to take him seriously. Then I figured he was some sort of troll out to mess with people, which is cool as far as I’m concerned. But it’s becoming increasingly clear that he’s a just a not so bright guy with a combination of idiosyncratic nonsense (e.g., give green cards to illegal immigrants with subprime mortgages) and standard right-wing talking points.
March 10th, 2010 at 11:11 am
His whole focus is ostensibly deficit reduction, so the fact that taxes go up isn’t particularly surprising, and it certainly isn’t a sign of typical Republican hypocrisy.
Except that he has taxes go up while reducing overall tax revenue. He’s not increasing taxes to reduce the deficit. He’s increasing taxes while at the same time increasing the deficit, just so he can give the rich a massive tax cut. That’s the very definition of typical Republican hypocrisy.
March 10th, 2010 at 11:12 am
Someone needs to explain to Morgan how addition and subtraction work.
Massive tax giveaways to the wealthy with no spending offsets and unfunded foreign invasions and occupations explode the debt. Try to keep up.
March 10th, 2010 at 11:12 am
I suppose it needs to be asked . . .
Morgan Warstler – would you approve of requiring citizens to pay a fee before being allowed to vote?
March 10th, 2010 at 11:14 am
10: The point is to make Ryan’s plan sound unjust while avoiding any argument about the just distribution of taxes. If “Obama’s tax ideas” are the standard for distributive justice, then of course Ryan’s plan, while leaving us with a progressive tax code, is unjust to the extent that it diverges from these ideas. At the Center for American Progress, you’re allowed to assume that this is the case.
March 10th, 2010 at 11:20 am
Is LMAO acceptable political discourse?
At what point do we just stop addressing Conservatives as anything but “Battleship Potemkin”esque mustache twirlingly evil and/or dumb?
I’d like to see R-Gibbs just say “LMAO” at the lectern sometime to all Republican ideas. It’s his prerogative as a member of the Executive Branch whether he chooses to pronounce it as a word or acronym though.
March 10th, 2010 at 11:22 am
Paulie,
please be clear: immigrants getting green cards is 20-30% down payment with proveable income to save low income neighborhoods.
It means foreign students stay here and keep their big brain, and their big paycheck here to hire your mom for services rendered.
It means tech companies help their new foreign hires buy houses, keeping high paying jobs here, so they pay your fmaily to work for them.
It mean illegal immigrants who have their shit together, become legal, so they can clean your mom’s yard in the open.
Why do you mis-characterize it as “sub prime mortgages.” You are common talking point, I’m pitching something that makes god damn sense and deserves to be considered.
——
People do not have to pay to be citizens. The point is we’re not talking about ANYONE PAYING.
We’re talking about people getting less free shit.
Matt is trying to confuse the issue. Ryan’s plan means less free shit given away. Keep it simple.
You shouldn’t need to pretend people are going to actually “PAY,” under Ryan, say what you really mean.
March 10th, 2010 at 11:25 am
Pketzle, did you completely miss the point of this post? It wasn’t that he proposes raising taxes on the bottom 90%, it was that he proposes that while simultaneously slashing taxes at the top.
No, I think I pretty much directly addressed the main point of the post. Matt made one small reference to the reduced burden on the rich, but everything else was about the fact that taxes were raised for 90%. Now, I don’t think that this shifting of tax burden is an unimportant point, but it’s mostly not Matt’s.
Except that he has taxes go up while reducing overall tax revenue. He’s not increasing taxes to reduce the deficit. He’s increasing taxes while at the same time increasing the deficit, just so he can give the rich a massive tax cut. That’s the very definition of typical Republican hypocrisy.
To read Ryan’s point in the most generous light (and, frankly, of all Republicans currently talking about policy, he’s the only one I can think worthy of granting that courtesy to), he would probably argue that paying off this debt should be shared by the population as a whole. That’s a fairly standard Republican philosophical line, but unlike traditional Republican hypocrisy, he’s not shifting tax burdens to increase the debt and give his friends a break. The fact that this is an attempt to eliminate the debt makes this merely a very, very bad idea.
So don’t misunderstand me. Ryan’s proposal is unethical, unfair, and terrible economics, on top of being a bit disingenuous by hiding the true costs and actual structure of the cuts he’d theoretically implement. And I think Democrats should hang the Republicans for this bit unforced honesty.
It’s the most perfect illustration of the Republican worldview, and it’s not only radical, it will leave the country far less prosperous, healthy and equal in the end.
March 10th, 2010 at 11:26 am
In case anyone’s wondering about this, Ryan’s plan replaces the exclusion for employer-provided health insurance with a tax credit for purchasing individual insurance. At best, this is obviously a wash and can’t offset the new VAT (in practice, it’s worse since the credit doesn’t increase as fast as healthcare costs, but that’s a different point).
March 10th, 2010 at 11:27 am
“Empires wax and wane; states cleave asunder and coalesce.
When the rule of Chou weakened seven contending principalities sprang up, warring one with another till they settled down as Ts’in
and when its destiny had been fulfilled arose Ch’u and Han to contend for mastery.
And Han was the victor.”
– San Kuo Chih Yen-I
March 10th, 2010 at 11:27 am
I’m also going to point out that this is the BEST they have.
Their best and brightest.
March 10th, 2010 at 11:29 am
Your Reich is not going to last for 1000 years, my little Eichmann.
Considerably less, in fact.
March 10th, 2010 at 11:29 am
Right, Morgan. Because all those working Americans who, according to you, pay no taxes will get basically nothing for their contributions to Social Security and Medicare for most of their working lives.
I’m beginning to think that it’s a necessary requirement of conservative trolls that they suffer from selective amnesia.
March 10th, 2010 at 11:31 am
unlike traditional Republican hypocrisy, he’s not shifting tax burdens to increase the debt and give his friends a break.
What? That’s exactly what he’s doing. Like, literally, that exact definition. He’s shifting tax burdens, he’s giving his friends a break, and his doing so results in less tax revenue, therefore increasing the debt.
You might have a point if he shifted the tax burdens while increasing tax revenue, or at least left it the same. But apparently that’s not the case.
March 10th, 2010 at 11:33 am
Can someone please explain to me how there is still any validity associated with the idea that reducing the top marginal rate and eliminating taxes on capital gains, dividends and interest will result in economic growth and innovation? Look at this table, also from CTJ:
http://www.ctj.org/pdf/regcg.pdf
The top rate throughout the 1950s was 91%, with capital gains at 25%. Here are the year over year growth rates in nominal GDP from 1950-1960: 9.9, 15.5, 5.6, 5.9, 0.3, 9.0, 5.5, 5.4, 1.3, 8.4, 3.9. Except for 1951, when year over year inflation was 7.9%, and 1957, when it was 3.3%, no single year over year rate exceeded 2.8%, and was regularly below 2%.
The 1990s shows a similar effect. Is there any proven correlation between tax cuts and economic growth, borne out by actual evidence? If not, why are Republicans allowed to continue pretending that there is?
March 10th, 2010 at 11:34 am
I think it’s also important to note that Bush’s structural deficits are not actually our biggest problem right now. Draconian measures undertaken today to eliminate Bush’s structural deficits would probably damage the economy, short-circuit the recover, and actually be counter productive.
Once the economy picks up and we actually withdraw from Iraq and Afghanistan (probably by 2013 or so), Bush’s structural deficits will reduce in scope, and we can address them then.
March 10th, 2010 at 11:36 am
Well, one of us is missing something. Ryan’s plan includes massive, ridiculous, obscene spending cuts. So, shifting tax burdens, giving his friends less debt, but drastically cutting major entitlement programs like SS and Medicare doesn’t in turn increase the debt. Perhaps I’ve missed something.
But I do take your point that had he left the tax burden alone, he could massively cut spending programs still, but perhaps a little less. So do we then say that Ryan is using these cuts to the deficit as justification for asking 90% of the people to pay more? I think you could criticize him there, certainly.
March 10th, 2010 at 11:42 am
Paulk,
There’s nothing being taken from people who have been paying SS and Medicare their whole lives. But, if there isn’t a change, they will get nothing. So you and I have two choices:
1) current system crashes, they get nothing.
2) new system they get less.
The choice is pretty clear: less or nothing.
Ryan’s plan makes no changes to anyone unless they are under 55. Want more cushion? Make it 50.
Woof,
Not true. For some people in bottom 50%, they aren’t getting healthcare now, for those who are, healthcare doesn’t mean they pay $5700 more in taxes, not by a long shot. It easily offsets VAT for most of them.
March 10th, 2010 at 11:42 am
Re John at 27: “The 1990s shows a similar effect. Is there any proven correlation between tax cuts and economic growth, borne out by actual evidence? If not, why are Republicans allowed to continue pretending that there is?”
————-
Well, maybe there is a correlation between US tax cuts and economic growth in CHINA.
That’s where Bush’s 2001 tax cuts for the Rich went. Of course, the two-faced, deceitful Blue Dog Democrats and Republicans who approved that giveaway don’t like to talk about that.
The rest of the Democrats don’t either. After all, Matthew fails to note that US politics is largely driven by Democrats and Republicans whoring for dollars from the Rich, with “reform Democrats” like Obama bought in occasionally to allay popular outrage over $Trillion giveaways to the Superrich by promising “Change” while ensuring no real Change occurs.
March 10th, 2010 at 11:42 am
[...] Along those lines, Matt Yglesias introduces some necessary dread: [...]
March 10th, 2010 at 11:49 am
He’s shifting tax burdens, he’s giving his friends a break, and his doing so results in less tax revenue, therefore increasing the debt.
Actually, no. Under Ryan’s plan the deficit is eliminated. I think you are misreading the chart.
March 10th, 2010 at 12:03 pm
@Blackadder and Pktezle, you guys are being silly. The point is that Ryan accomplishes the miraculous feat of simultaneously raising taxes on 90% of Americans AND reducing overall tax revenue. Some characterize this as “increasing the debt”, which is a bit of a stretch, but defensible. The debt (actually deficit) is increased by the reduced revenue (resulting from massive tax cuts for the wealthy), requiring offsetting spending cuts.
I think it’s pretty clear that to Ryan cutting taxes on the rich was a more important goal that eliminating the deficit.
And, Blackadder, your confident assertion that “under Ryan’s plan the deficit is eliminated” takes an awful lot of faith. No one can predict the precise budgetary consequences of a plan like this.
March 10th, 2010 at 12:37 pm
So basically the logic here is that 90% of Americans will be paying more, and yet the federal gov’t will be receiving less.
Sounds like an awesome deal to me at a time when our nation is fighting two wars, suffering a recession (that affects 90% of Americans), facing a growing deficit and watching Medicare approach its impending bankruptcy.
March 10th, 2010 at 12:38 pm
Indar20– that may be true. But while the spending measure suggest this is an austerity package, the tax structure isn’t designed to share necessary pain. reduces government revenue while increasing taxes on the bottom 90% 0f Americans. So the tax side actually makes the debt problem worse.
It hikes the pain taxes cause while reducing the fiscal gain produced. It’s the perfect Republican plan. That it represents a massive giveaway to the extremely rich may almost be besides the point.
March 10th, 2010 at 12:49 pm
Thank you for proving, once again, that conservatives are too fucking stupid to be let anywhere near our government.
We can solve the SS and Medicare problem with one simple step: Raise the maximum income taxed for those to $500K.
**POOF**
Problem solved! Programs totally solvent!
After all, I pay those taxes on 100% of my income — why the hell should the rich get a break? What makes them so goddamn special?
For whatever reason, the right has decided that the rich deserve special breaks the rest of us don’t, while simultaneously convincing millions of complete fucking morons that the GOP is the one looking out of the little guy.
In a sane world, conservatives would have already been laughed out of our nation, and/or buried under the mountains of data that prove their economic theories are complete, utter, demonstrable, pathetic, ridiculous horseshit.
Sadly, we live in this one.
March 10th, 2010 at 12:52 pm
Morgan,
Regarding your statement about SS—no. That’s just not true. I know Republicans make a living saying that it’s true. But it’s not. We have a problem in that the rest of government has been living off SS contributions, and when that bill comes due, the government will have to make up that money somehow. One way to do that is to raise the retirement age, the other is raise taxes slightly. In no scenario for the future of SS do people get “nothing,” unless 70% is “nothing. And since these nightmare scenarios are all following the most dire prediction of the trusties—and more often than not SS follows the trajectory of their best estimate, the fear mongering is just ridiculous.
Medicare is a serious and entirely different problem related to the rising costs of healthcare. That’s why we have to find a way to control healthcare costs.
I do recommend that you read up on this debate. It’s been going on for quite a while and is pretty interesting.
March 10th, 2010 at 1:01 pm
I don’t care exactly how you say it, but the fact is that the Ryan tax plan would reduce tax revenue and therefore make eliminating the deficit harder and not easier. And he does this while increasing taxes for 90% of Americans.
That can’t be described as sharing the necessary tax burden of reducing the deficit. That can only be described as both increasing that burden and dumping it all on 90% of Americans, simply in order to give the wealthiest Americans a tax cut.
March 10th, 2010 at 1:03 pm
I’d be fine with someone showing me why I’m wrong about this, but I don’t understand this, Rob Mac. The debt has to be addressed somehow, even without Ryan’s tax cuts. I’m not going to defend Ryan’s position that this burden should be shifted from the super rich to the rest of us, but you seem to have his tax cut scheme backwards.
The whole purported rationale of this exercise is to cut the debt to zero. And I’d say that he’s using this as a justification for redistributing tax burdens. But if you’re going to accuse him of some plot here, I’d say it’s quite clearly to destroy SS and Medicare. Making everyone else pay for what’s left is largely just a bonus, one he thinks he can get away with in the name of “everyone paying a price” to clean up this mess. In his slightly warped worldview, he thinks that everyone else doesn’t pay nearly enough of that burden while I (and many here) think the super rich don’t pay enough and could easily pay more.
I think this is just a matter of semantics between us at this point. But I do think it would have been better had Matt made his focus more on the overall cut in tax revenue than on the fact that most people will be paying more.
March 10th, 2010 at 1:12 pm
I’d be fine with someone showing me why I’m wrong about this, but I don’t understand this, Rob Mac. The debt has to be addressed somehow, even without Ryan’s tax cuts. I’m not going to defend Ryan’s position that this burden should be shifted from the super rich to the rest of us, but you seem to have his tax cut scheme backwards.
I don’t understand what you don’t understand. The projected future debt is a combination of current debt plus expected future spending minus expected future revenues. Ryan’s tax plan DECREASES expected future revenues, so actually INCREASES the projected future debt as a discrete matter.
Now you can then point out he claims to be cutting expected future spending enough to balance that out. But that doesn’t change the fact that his tax plan specifically makes the future debt problem worse, not better.
The whole purported rationale of this exercise is to cut the debt to zero.
What do you mean by “this exercise”? If you mean the tax plan, then actually it makes things worse not better. If you mean the total package of tax and spending plans, OK, but again that doesn’t change the fact that his tax plan makes things worse and not better.
March 10th, 2010 at 1:12 pm
he would probably argue that paying off this debt should be shared by the population as a whole.
I’m reminded of Bill Hicks’ line about Jesse Helms and ‘tightening our belts’.
This is BOHICA tax policy.
March 10th, 2010 at 1:13 pm
Blackadder and Pktezle, you guys are being silly. The point is that Ryan accomplishes the miraculous feat of simultaneously raising taxes on 90% of Americans AND reducing overall tax revenue.
Again, no. It’s true that under Ryan’s plan the government would collect less tax revenue than under Obama’s plan, and that a smaller proportion of revenue would come from the top. It doesn’t follow that Ryan’s plan raises taxes or collects less revenue. Obama’s plan isn’t the law, nor is it likely to be.
Under Obama’s plan spending goes up a lot and taxes on the rich go up a bit. Under Ryan’s plan spending goes down and taxes stay the same. You can say the Obama plan is better if you want, but it’s just not accurate to say that Ryan’s plan involves raising taxes or collecting less revenue.
March 10th, 2010 at 1:16 pm
This table makes a faulty assumption that income levels are the same under both tax plans. While many people on this website tend to scoff at the idea that tax rates affect income levels and economic growth, they are wrong. The point they usually make is that there is not a strong correlation between overall economic growth and the highest marginal tax rate, which is true but irrelevant. A better measure is the growth rate of the highest income people relative to the highest marginal tax rate and what you’ll find is that their income goes up when tax rates are cut. This is why income inequality has risen since the 1960’s when marginal tax rates were cut. You can still be for high tax rates on the rich, but you won’t necessarily be raising more revenue. A more likely outcome is reduced income levels and growth among that group and a reduction in income inequality.
March 10th, 2010 at 1:21 pm
Actually, no. Under Ryan’s plan the deficit is eliminated. I think you are misreading the chart.
The chart very clearly says that his tax policies result in $183 billion less in revenue (unless you’re interpreting a “revenue loss of -183 billion as a gain of 183 billion, which I don’t think is meant).
Now, it’s also the case that his overall plan eliminates the deficit in the long run, though it does this by literally telling the CBO to assume current tax revenue, not the revenue that would actually happen under his plan.
Regardless, the point is: part of his plan to eliminate the deficit is a tax policy that increases the deficit. Were the tax policy the only part of his plan, his plan would increase the deficit. That was my point.
March 10th, 2010 at 1:22 pm
Obama’s plan is the law, at least as of today. As I understand it “Obama’s Plan” refers to the current tax code minus the Bush tax cuts, which are currently due to expire.
March 10th, 2010 at 1:23 pm
You can say the Obama plan is better if you want, but it’s just not accurate to say that Ryan’s plan involves raising taxes or collecting less revenue.
Read the damn chart. It very specifically says both those things. It’s clear as day. A middle-schooler could see that.
March 10th, 2010 at 1:24 pm
The chart very clearly says that his tax policies result in $183 billion less in revenue (unless you’re interpreting a “revenue loss of -183 billion as a gain of 183 billion, which I don’t think is meant).
The chart shows 183 billion less in revenue “compared to Obama proposal.”
March 10th, 2010 at 1:27 pm
The chart shows 183 billion less in revenue “compared to Obama proposal.”
The Obama proposal is, of course, to simply allow the Bush tax cuts on the top bracket to expire. A year from now, that will be current law.
You’ve dug yourself into a big hole here. Defend Ryan and his plan all you want, but you can’t defend the claims you’ve made about it. I suggest you move on to the next thread.
March 10th, 2010 at 1:28 pm
A middle-schooler could see that.
Conservatives are not even smarter than a 1st grader, never mind a 7th grader.
March 10th, 2010 at 1:39 pm
Typical Left-biased static analysis.
While pursuing an extremist agenda that leaves vast hordes out of work, with permanent reductions in employability and wages, liberals want to “chase the Laffer curve” until the currency is debased, the most productive Americans go “John Galt”, and the private economy’s institutions are irrevocably damaged.
Under Ryan’s plan, people return to work sooner — by a matter of months if not *years* in the Obama trainwreck economy — and earn higher wages over their lifetime, at better, more rewarding jobs. The top income earners get to keep more of their own money, and yes, they’ll earn much more as they create jobs and improve the livelihood of everyone else.
So what if there are a few percentage points of additional estimated tax burden, spread more evenly across society than our already extremely “progressive” systems, which hangs like an albatross around the necks of the most productive Americans?
It’s laughable to suggest *anyone* is better off with deficits as far as the eye can see, a dismal future for our children, decaying education and job prospects, delays for most major medical procedures, dismal conditions for our elderly, and the rest of the liberal dystopia.
As far as healthcare is concerned, where Yglesias wears his ignorance on his sleeve, I have this to say:
subsidies + cost controls = shortages
which means long wait times, rationing — and yes, people will die, so death panels.
March 10th, 2010 at 1:40 pm
Adam,
Here is a copy of the revenue estimates for Ryan’s plan. Below are the revenue estimates for the next few years as a percentage of GDP:
2009: 15.8%
2010: 16.4%
2011: 17.4%
2012: 18.1%
2013: 18.3%
The revenue estimates continue to rise up to 19% of GDP in 2030, and remain at 19% thereafter. The claim that Ryan’s plan anticipates lower revenues is just incorrect. The plan doesn’t say that, and neither does the chart Matt posted above.
March 10th, 2010 at 1:44 pm
Adam is correct. No one has scored “Paul Ryan’s plan” to see if it eloiminates the deficit or pays the debt. The CBO was sepcifically told by Ryan’s tstaff to ignore his tax policiers as they scored his plan, which means they assume current tax policies. See Assume a can opener…
They even bring the funny…
Not convincing. It really is just a thin bit of wooly garment over the SS- and Medicare-destroying wolf. Same wolf, different day.
March 10th, 2010 at 1:45 pm
Call me cynical, but I somehow doubt that the credits Morgan (#3) refers to would ever make it through a Republican Congress. It’s one thing to promise a $300 check to every taxpayer that will eventually be deducted from tax payments. It’s quite another to give $2300 or $5700 to every taxpayer in the bottom three brackets. Such a rebate would cost hundreds of billions of dollars.
The rebates are only available for the cost of health insurance, which raises the question of whether they are tax or not. Basically, Ryan is saying: instead of paying the government $x for health insurance, you must pay a private insurer $x for health insurance. The promise is made that “if you finder a cheaper plan, you get to keep the difference!” The cynic in me suspects that the opposite would happen – lacking cost controls, health insurance costs would continue to outpace inflation.
And that doesn’t address the problem that, under Ryan’s system, there is a likelihood that employer-provided health plans would disappear. People do not pay income tax on their employer-provided health plans. If their health care plan disappears, or as workers with health care plans are replaced by those without such plans, there is a real decrease in income.
I don’t see how this would work out in the long run for your median taxpayer.
What this study does show is what a switch to a VAT is such a fantasy for the right wing. Compared to the income tax, a VAT is regressive. It will shift the tax burden away from the rich to the middle class and the poor. (BTW, we already did that once in the 80s, the last time we had Social Security reform.) Also, fixed numbers like $2300 and $5700 would eventually become less important as inflation eroded the value of the rebate.
March 10th, 2010 at 1:46 pm
Blackadder,
The claim is that Ryan’s tax plan is estimated to cut future revenues versus what current law would produce, including the current scheduled expiration of the Bush tax cuts.
Are you denying this is true?
March 10th, 2010 at 1:58 pm
I note that CBPP has now done an analysis, which I have not yet read:
http://www.cbpp.org/cms/index.cfm?fa=view&id=3114
One underappreciated aspect of Ryan’s roadmap, as I understand it, is that he specifically asked the CBO not to evaluate how much revenue would result from his tax proposals. His proposal should not be taken seriously until CBO does this analysis.
March 10th, 2010 at 2:06 pm
By the way, looking through the Obama tax plan they used as a basis for comparison, it is pretty clear the Obama plan would also cut revenues versus current law. So I think the difference between the Ryan plan and current law is greater, not less, than the difference between the Ryan plan and the Obama plan.
March 10th, 2010 at 2:12 pm
The claim is that Ryan’s tax plan is estimated to cut future revenues versus what current law would produce, including the current scheduled expiration of the Bush tax cuts.
Are you denying this is true?
No, if all the Bush tax cuts were to expire then you’d have more revenue in the short term than under the Ryan plan. Likewise, if Congress doesn’t defer the yearly Medicare reimbursement cuts for doctors this will result in more spending cuts in the short term than under the Ryan plan. Pretending that these things won’t happen, however, would be like pretending that the sun won’t come up tomorrow.
March 10th, 2010 at 2:22 pm
MarkD Paul K, Guys I don’t think you are accepting a basic fact:
Tax revenues are not going to go much past 20% of GDP no matter what you hope will happen. In 70 years, SEVENTY YEARS, no matter what the highest tax rate (as high as 91%), the government has basically gotten 18-19%.
So, let’s say we achieve a miracle and today we pay back our 15T in debt, and for the next miracle for next 30 years we have:
2% inflation
3% GDP growth
21% of this is collected in taxes yearly
By my math, in 2040, we have a $33.4Trillion GDP and the government is taking in $7Trillion.
NOTE: at just 2% inflation, that $7Trillion is worth $3.86Trillion in today’s dollars, and at 3%, $7T is worth $2.88Trillion.
Note: In 2040, we’ll have 80M Seniors, and using the entirely magical formula above, with revenue of $3.86Trillion we still need to cut the average Medicare and Social Security payment by 40%.
I think I have an ok grasp on the numbers. You on the other hand are DREAMING. You shouldn’t really weigh in, until you explain HOW you think we’re even going to capture even 21%.
March 10th, 2010 at 2:29 pm
[...] covered the Center for Tax Justice’s analysis of the Ryan Ripoff, the top House GOP budgeter’s plan to reduce tax revenue while raising taxes on ninety [...]
March 10th, 2010 at 2:37 pm
Shouldn’t Democrats be pointing out daily that we are at a 70 year low in taxes? I mean every day, every time on TV. We are at a 70 year low in taxes and we have a Tea Party movement?
March 10th, 2010 at 2:38 pm
[...] post by myglesias and software by Elliott Back Comments [...]
March 10th, 2010 at 2:41 pm
Yahoos like Morgan, when they run their numbers, conveniently like too leave out the fact that those seniors from 2040 currnetly have something like 20 trillion dollars in “qualified retirement plans that is, of course, taxed at regular income tax rates. The effect that this will have on paying off debt cannot be overstated and is almost always understated if even mentioned.
March 10th, 2010 at 2:50 pm
Pretending that these things won’t happen, however, would be like pretending that the sun won’t come up tomorrow.
I don’t know about the Bush tax cuts. Certainly it seems possible, likely even, that they won’t be fully extended.
In any event, my point was just that using the Obama plan as a baseline instead of actual current law was actually favorable for Ryan’s plan, and it still represented a revenue cut.
Of course as we are now discussing elsewhere, Ryan’s plan also didn’t balance the budget. Basically, it sucks in every conceivable way, and it is the best the GOP has got.
March 10th, 2010 at 2:51 pm
Theo,
What rate do you believe Seniors are to be paying? Try 0%.
Why do you think I want to keep them working, even for sub-minimum wage if need be?
And why do you think this isn’t covered? And is this the magic that will drive GDP past 20%, when top tax rates of 70%, 80%, 90% didn’t achieve it?
Any more than 20% of GDP as an assumption is negligent fantasy. It is lying to yourself.
March 10th, 2010 at 2:57 pm
The top income earners get to keep more of their own money, and yes, they’ll earn much more as they create jobs and improve the livelihood of everyone else.
It’s funny how Galtards always think they’re special little flowers who’ll be showing the serfs what to do.
March 10th, 2010 at 3:00 pm
Morgan,
You must not know this but I’m happy to help. Seniors pay regular income tax on “qualified plans” such as 401ks or IRAs. Age has nothing to do with it. We are talking about huge IRAs that need to be disbursed beginning when a person turns 70 and a half. All of the disbursements are taxable and none of it comes from GDP. 40 years ago almost nobody had large IRAs. Now they are very common. This money is also taxable to heirs upon the death of the owner.
Since all of this money is taxable(not sure why you think seniors don’t have to pay it) and none of it comes from GDP, of course it will increase the amount of revenues in relation to GDP.
March 10th, 2010 at 3:35 pm
In any event, my point was just that using the Obama plan as a baseline instead of actual current law was actually favorable for Ryan’s plan, and it still represented a revenue cut.
If you did a comparison with projections assuming that the entire Bush tax cuts expire, then you would have less revenue under the Ryan plan. In that case, however, it wouldn’t be true that taxes would be higher for 90% of Americans. If you do a comparison with projections assuming the tax cuts don’t expire, then taxes may be higher for the bottom 90% under the Ryan plan (assuming you don’t count the tax credit), but revenues would also be higher. So the claim that Ryan’s proposal increases taxes on the bottom 90% while simultaneously losing revenue isn’t true regardless of how you count the Bush tax cuts.
March 10th, 2010 at 3:47 pm
[...] Matty Yglesias is pouting that the Rep. Paul Ryan Tax Plan would mean “higher taxes for 90% of Americans” as if though that were a bad thing… [...]
March 10th, 2010 at 3:52 pm
If you did a comparison with projections assuming that the entire Bush tax cuts expire, then you would have less revenue under the Ryan plan. In that case, however, it wouldn’t be true that taxes would be higher for 90% of Americans.
I don’t understand what you mean. I suppose there might be a few people who would switch categories from higher under Ryan’s plan to not higher under Ryan’s plan if you assume a total expiration of Bush’s tax cuts, but that won’t be many people.
If you do a comparison with projections assuming the tax cuts don’t expire, then taxes may be higher for the bottom 90% under the Ryan plan (assuming you don’t count the tax credit), but revenues would also be higher.
First, I don’t know why that assumption is warranted: that isn’t current law, nor an automatic outcome of the current political process, so you are basically just subtracting out part of Ryan’s plan to get his numbers to look better. Second, are you sure about revenues being higher under that comparison? Ryan’s plan does a lot of other things to cut revenues besides extending the Bush tax cuts.
So the claim that Ryan’s proposal increases taxes on the bottom 90% while simultaneously losing revenue isn’t true regardless of how you count the Bush tax cuts.
As noted above, assuming you use current law and not Obama’s proposal as your baseline, it may be some number slightly less than 90% that Ryan’s plan would increase taxes on. But I don’t think slightly decreasing that 90% figure would make a big difference to the point Matt was making.
March 10th, 2010 at 4:07 pm
tell me again, please I don’t understand. How is it that the political discourse in our nation is so freakin’ skewed that President Obama has to speak out loudly over the din to point out that he has in fact already lowered the taxes of 90% or Americans, in the face of Republican lies that he has raised them. But then Ryan gets away with a proposal that would raise taxes on those same 90%, lower them on the top 10%, and still not balance the budget. I think I’m gonna move to Costa Rica. I’ll take my answer down there.
March 10th, 2010 at 4:26 pm
Theo, I got the point the first time. The whole reason to save money tax free is so when you actually use it – usually on fixed retirement – you pay as little as possible in taxes… meaning you own all the stuff in your house, you own your house, and now you will live on $30K per year. So that you pay next to nothing in taxes… likely with more for property than income.
Meaning, EARLIER in your life when you were part of the GDP, you didn’t pay taxes, and now you will do a pretty good job of not paying taxes on it again.
That you think this is going to push the tax grab consistently past 20% is well odd. Cite please.
March 10th, 2010 at 5:38 pm
To Morgan.
You seem like a troll, but at the same time trolls don’t put in this much effort usually. That is why you are so scary. There is one thing that you have been avoiding addressing and it makes all of your arguments disingenuous, why we should lower taxes on the super rich while increasing the taxes on the poor. If you say it will create jobs I am going to laugh in your face. Another funny little fact, the U.S. government gives way more money to the rich then the poor. Add up all the government programs for the poor and combine them. Then think about the subsidies we give to “farmers” aka the industrial food complex and the owners of these operations. The subsidies we give the super rich to stay that way are absolutely astounding.
BTW, when you die we will be better off, not because there will be one less dissenting position to my own, but because there will be one less person who willingly takes it up the ass (not in a gay way either, that would be way better.) Also I am assuming your not poor because you have the time on and enough access to the internet to post all of your B.S. Go to a poor neighborhood and keep saying they deserve to pay more to hold on to their slender chances of staying alive as long as you will, sadly.
March 10th, 2010 at 5:45 pm
Check out this guy’s plan!
March 10th, 2010 at 6:24 pm
[...] Matthew Yglesias » The Ryan Tax Plan: Higher Taxes for 90% of … [...]
March 10th, 2010 at 7:56 pm
Davis,
I know you think of Ryan’s plan a tax cut for the rich. But just a couple days ago, Matt ran graph here showing the effective tax rates as they currently are for each quintile – and if you look at them REALLY stare at them, you’ll have to admit THERE IS NO TAX CUT from Ryan. The rich are not paying 25% now.
Then, as now, I strongly supported Gregg’s tax policy – as Ryan does I’m sure if pushed, on this basic premise:
1. 15/25/35 tax rates.
2. Reduce corporate taxes to 24%
3. Increase personal deductions by 3x.
Look, that’s a TRUE tax increase 35% on rich people without any loopholes (accept one I’ll note in a sec)- the whole issue is ENDING all the loop holes and credits that Democrats love to play with.
—–
The issue is that, every post Matt makes then as now, it all hides a very clear reality, that we need to accept: 20% of GDP is basically it.
I’m just doing some quick napkin math, but in that post Matt complained that somehow the government with loopholes left $1TRILLION on the table.
So this year the tax/GDP is 17%
We’re taking in 2.4T on 14.2T
The 20% rule really means, that NO WAY is Matt going to reclaim $1T – if he gets lucky and captures another 3% he gets $420B. Getting lucky at 20% year after year is hard, because Dems keep inventing tax breaks.
Now amongst conservatives, the basic idea isn’t actually to reduce taxes on the rich (see me, gregg, ryan) it is to simplify the tax code, and generally get rid of loopholes etc. Press us and we probably think 18% of GDP leads to more growth than 19%, but ending loopholes, getting core incentives right is much more important.
Now with Gregg’s plan the loophole has been pre-accounted for, that’s why the upper tax rate is 35% – higher than even now.
We need to reduce corporate taxes to keep companies from leaving. In the modern economy, the US obviously needs to have as strong pitch to woo global players to open and stay here.
We want that very competitive 24%, but we know that lots of rich guys, are going to defer income to keep their profits inside their companies, since without the loopholes, their income taxes are going up.
THAT’S WHY the rate is 35% – 35% is what rich people will have to pay on the money they want to live on.
This means there will need to be clear boundaries between is it a company car, plane or a personal one.
Finally of course AG subsidies etc need to be ended now.
March 10th, 2010 at 8:42 pm
This is just more propaganda. Proof you shouldn’t believe everything people say.
It doesn’t take into account the standard tax deduction or how many use the head of household reduction. It is the general tax rate before reductions. This is another form of Michael Moore reporting. If this was really true then the mainstream media would seize on it since they’re mostly liberal.
Most GOP support the plan because it does lower taxed for almost everyone.
It just shows liberals are more interested in ideology than reality.
March 11th, 2010 at 2:02 pm
This analysis doesn’t even get to the root of the outrageousness here. Forget the top 1%, what about the top 0.01%?
The Ryan Roadmap includes the four following elements:
No tax on capital gains.
No tax on interest.
No tax on dividends.
No estate tax.
Billionaires don’t get to be billionaires by earning wages, they get there by controlling and growing capital. And I guess you can pull a Galt and claim that they deserve all of that money because they are by definition a ‘producer’. But does that mean they have no obligation to contribute to the common defense and the general welfare? And even if you stretch it that far should that privilege extend to the third or fourth generation?
I hear there is some show called NYC Prep about spoiled Trust Fund babies, including a grandson of billionaire Peter G. Peterson. Under the Ryan Roadmap not one of those snotty kids would ever have to pay tax on a penny of their inherited income. Ever.
You don’t have to be a raving socialist to think that maybe there is something wrong with this picture.
March 11th, 2010 at 3:38 pm
[...] the last few days, there have been a series of liberal attacks on the tax proposals in Paul Ryan’s fiscal roadmap. For the most part, they’ve been [...]
March 12th, 2010 at 1:16 am
[...] estimate at face value. What the?). Second, in an admirable trick, despite cutting taxes overall, only the top 10% would pay fewer taxes under Ryan’s plan. The top 1% would pay 15% less while the bottom 20% were paying 12% [...]
March 12th, 2010 at 2:14 am
[...] been full of praise for Wisconsin Representative Paul Ryan who has stepped up to the plate with a comprehensive budget plan based on conservative principles and designed to eliminate the [...]
March 12th, 2010 at 2:16 am
[...] been full of praise for Wisconsin Representative Paul Ryan who has stepped up to the plate with a comprehensive budget plan based on conservative principles and designed to eliminate the [...]
March 12th, 2010 at 11:48 am
[...] Meanwhile, in USA: Rep Paul Ryan (R-WI) the top GOP member of the Budget Committee wants to cut Social Security, Medicare, Medicaid, Defense(!) plus privatize Medicare, increase taxes on the bottom 20% of citizens by 12.3%, decrease taxes on the richest 1% by a whopping 15%, send a few hundred billion to for-profit insurance companies and calls the whole thing a tax cut. Tax cut – where 90% of the population pays more taxes to receive less services. (Source) [...]
March 12th, 2010 at 2:33 pm
[...] Via Yglesias. [...]
March 14th, 2010 at 4:51 pm
[...] Matthew Yglesias: Paul Ryan’s “budget roadmap” has terrified the GOP leadership, but thrilled conservative intellectuals with its calls for sharp cuts in Social Security, Medicare, Medicaid, defense, and all other government programs combined with privatization of Medicare so that a larger share of your diminished benefit goes to for-profit insurance companies. Less widely discussed is the tax aspects of Ryan’s plan. As you would expect from a conservative plan, compared to Barack Obama’s tax ideas Ryan would raise less government revenue. This is why he needs sharp cuts in Social Security, Medicare, Medicaid, defense, and all other government programs combined with privatization of Medicare so that a larger share of your diminished benefit goes to for-profit insurance companies. [...]