CTJ Shows Tax Proposals in Rep. Ryan's 'Roadmap' Lead to Disaster
by Gary Therkildsen*, 3/10/2010
In a report released yesterday, Citizens for Tax Justice (CTJ) critically examine the tax policies proposed recently in Rep. Paul Ryan's (R-WI) budget alternative, conventionally titled, "A Roadmap for America's Future." Claims of the proposal "balancing the budget" and "reforming entitlements" have already been thoroughly debunked, but CTJ has contributed a valuable analysis of the young Republican's tax policies, which will actually cost the government "$2 trillion over a decade even while requiring 90 percent of taxpayers to pay more" than they already do in taxes.
How does Ryan, the ranking member on the House Budget Committee, accomplish this stunning feat? Steve Wamhoff, the report's author, argues that Ryan's proposal reduces federal receipts and outlays to recklessly low levels, while pumping money into the pockets' of the nation's wealthiest citizens. Ryan, according to Wamhoff, structures this disaster of a budget proposal around four main tax policies: extension of all Bush Tax Cuts; introduction of a "simplified" tax as an alternative to the personal income tax; elimination of the estate tax; and replacement of the corporate tax with a value-added tax (VAT).
I know we're just beginning to see signs of an economic recovery, but that doesn't mean that it's time to start providing tax relief to those making over $250,000 a year. Extension of the Bush Tax Cuts for the wealthiest Americans makes little sense when you examine the cost to government in the form of lost revenue and the unsustainability of claims that rich people use most of their money to create jobs. In light of Ryan's other regressive tax policies in the proposal, though, I suppose we should be grateful that he just didn't reverse President Obama's plan and only extend the Bush Tax Cuts for those making over $250,000.
The effects of Ryan's "simplified" income tax competing with the traditional income tax make the proposal, according to Wamhoff, anything but simple. The plan reduces taxes for all but the poorest Americans and takes more money from you the wealthier you are, but the benefits of the system are extremely regressive compared to the current income tax structure. Moreover, the competition of the "simplified" tax would actually complicate matters as people tried to shift from one system to the other depending on which one required the least amount of tax liability.
I have exhaustively chronicled how elimination of the estate tax would benefit only the wealthiest of Americans and drastically hurt the government's bottom line, all while discarding one of the only checks on the accumulation of wealth – and, therefore, power – in this country. Replacement of the corporate tax with a consumption or VAT for business would create a regressive tax that would overwhelmingly hurt the poor and middle class, as businesses would be able to shift what was once a tax on them onto consumers.
Critics have been beating up on Rep. Ryan's budget proposal since he released it back in February, but, as Matt Yglesias noted earlier today, it's important to consider that in the not-too-distant future, Ryan could be writing budgets for a GOP majority, "presumably animated by the same moral principles that led him to this idea." That is a scary thing.
Image by Flickr user Juan Nosé used under a Creative Commons license.