House Budget Committee chairman Rep. Paul Ryan’s budget could not achieve its intended goal of not adding to the nation’s deficit unless it enacted tax hikes on incomes of less than $200,000, according to a new study from the left-leaning centre on Budget and Policy Priorities.The CBBP followed up on a study released Friday by the Tax Policy centre, which concluded that Ryan’s budget would add $5.7 trillion to the deficit. The Tax Policy centre also suggested that Ryan’s budget presented the same problem as Republican presidential nominee Mitt Romney’s tax plan during the campaign. It found that the Ryan plan could not both trim the deficit and enact sweeping tax cuts on all income groups.
The CBBP’s report, meanwhile, goes further on the TPC’s implication and flatly states that Ryan’s plan budget could not close the $5.7 trillion gap without a massive tax hike for middle-income earners.
The CBBP estimated that Ryan’s budget is even more challenging than Romney’s tax plan — whereas Romney wanted to cut the top tax rate to 28 per cent from 35 per cent, the Ryan budget would cut it to 25 per cent from 39.6 per cent.
Here are the CBBP’s three conclusions, with the third spelling out what it could mean for incomes of less than $200,000 (emphasis added):
- Without any reductions in tax expenditures, the tax cut goals in the Ryan budget would cut taxes for households with incomes over $200,000 by about $34,500 and cut taxes for households with incomes of more than $1 million a year by about $330,000 on average.
- If policymakers enacted the same extremely ambitious reductions in tax expenditures for filers with incomes above $200,000 that TPC assumed when it analysed Romney’s tax plan, filers with incomes of $1 million or more would lose tax breaks totaling about $90,000 on average — still leaving them with an average net tax cut of about $245,000. Households with incomes above $200,000 would get a net cut of about $16,000.
- And, to fully finance the tax cuts for people with incomes over $200,000, filers with children and incomes under $200,000 would see their taxes go up by more than $3,000 on average, even with the ambitious reductions in tax expenditures for high-income households that TPC examined.
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