Think Tank Dismantles The Ryan Budget, And Shows How Tax Cuts Overwhelmingly Benefit The Rich

The non-partisan Tax Policy centre is out with a dismantling of Paul Ryan’s new budget proposal that hits its lack of specifics in much of the same way it slammed Mitt Romney’s tax-code revamp during the presidential campaign last summer.

In its study, the centre concludes that Ryan’s budget would add $5.7 trillion to the deficit — because of proposals to simplify the income tax code to two levels of 10 and 25 per cent, repeal the Alternative Minimum Tax, repeal certain tax increases from the Affordable Care Act, and cut the top corporate tax rate to 25 per cent.

It’s “hard to imagine” Ryan’s budget plan working out to be revenue neutral, the TPC’s Howard Gleckman wrote in a blog post accompanying the study.

But if Ryan plans to implement those tax cuts and still make good on his promise to balance the budget, other taxes would have to be raised by $5.7 trillion. 

According to the study, the Ryan budget’s tax cuts would also proportionately benefit upper-income earners. Here’s a look at each income bracket’s per cent change in after-tax income looks in chart form:

Ryan budget tax cuts

Photo: Brett LoGiurato/Business Insider (Data: Tax Policy centre)

According to the TPC, the top 0.1 per cent of incomes would see a $1.2 million increase in after-tax income. The bottom 20 per cent of incomes, on the other hand, would see an average tax cut of about $60. 

The TPC didn’t analyse what potential tax hikes the budget would have to raise, since Ryan didn’t identify any potential tax increases in his proposal. But Gleckman speculates that most of the burden would fall to middle-class incomes because of the huge, $5.7 trillion revenue gap:

“[B]ecause his plan does not identify any tax increases, TPC modelled only the tax cuts. […]

But because the rate cuts are so regressive, House Republicans would have to heavily skew offsetting tax increases to high-income households if they want to keep the distribution of taxes roughly what it is today. And that will be another heavy lift.”

When the centre gave a similar analysis of Romney’s tax plan during the campaign and doubted it could be revenue neutral, Romney himself called the study “garbage.”

Democrats, meanwhile, were quick to jump at the study as they did last time. 

“Mitt Romney and Paul Ryan lost that argument,” said Rep. Chris Van Hollen, a ranking member of the House Budget Committee. “Yet here we have a re-run of that plan that was thoroughly rejected by the American people.”

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.