Here's Paul Ryan's Bombshell Plan To Change The Tax Code And Balance The Budget

Paul Ryan

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. 

According to Ryan, on the current path we'll end up with debt 900% of the GDP by 2090.

Ryan's plan is based on the premise that entitlements are the biggest driver of government spending.

Delaying is only going to make the cuts more painful.

Rising health care costs are the biggest thing driving government spending up.

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.

What really drives revenue growth is GDP growth.

According to the plan, spending is the major factor in growing government debt, not declining revenue.

The U.S. is already approaching levels of debt comparable to the European nations in crisis.

And the debt isn't just owed to ourselves, foreign countries have been buying it up.

If nothing is done, public debt will continue to be a drag on the economy.

The Ryan plan proposes bringing spending down to historical revenue-levels.

The Ryan Plan promises a return to government surpluses, but not until the 2030s.

Here's the first chart again, but with Ryan's plan added in green.

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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