Paul Ryan, the Chairman of the House Budget Committee has put forward the latest update of his “Path To Prosperity” plan. It’s a budget for the federal government that includes massive tax cuts and tax simplification, with spending cuts to major government entitlements like Medicare, Medicaid, and Social Security.
Here are the big things: Ryan would redraw personal income taxes into two brackets, 25 per cent and 10 per cent. The plan doesn’t exactly specify yet what income would qualify you for the higher bracket.
There would also be a massive drop in corporate taxes from 35 per cent to 25 per cent. And there would be hardly any tax deductions either.
The plan also includes an enormous overhaul to Medicare and Medicaid, cutting benefits for the most wealthy, and introducing competition at the lower levels. Oh, and Ryan’s plan includes repealing Obama’s health-care reform law too.
There are hundreds of little details that you can find in the plan itself.
No one expects this exact proposal to become the law of the land under a Democratic controlled Senate and White House.
But Ryan’s budget is a political document. It uses facts and projections to argue for the policies it contains, and to argue that Republicans should rule.
Ryan's plan is based on the premise that entitlements are the biggest driver of government spending.
Ryan argues that the complicated tax code benefits the wealthiest, and so his plan eliminates deductions.
This chart shows that however high top tax rates go, government tends to collect a very even amount of revenue.
According to the plan, spending is the major factor in growing government debt, not declining revenue.
The Ryan plan even proposes that federal government spending can go way below the level it has been since the New Deal and World War II.
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