(For commentary by Howard Gleckman of the Tax Policy Center on the widespread misunderstanding of the CBO analysis, see the box on page 5.) CBO did not find that the Ryan plan actually would achieve these assumed revenue levels. Ryan’s staff that the overall level of revenues would remain unchanged from what the federal government would collect through 2030 under current policies, and would equal 19 percent of GDP in later years. Instead, as its report states, CBO simply used an assumption specified by Rep. In its analysis of the Ryan plan, CBO did not attempt to measure the revenue losses that Rep. CBO generally does not produce estimates of the effects of proposed changes in tax policies that is the responsibility of the Joint Committee on Taxation. Contrary to some media reports, CBO has not prepared an actual cost estimate of it. CBO only partially analyzed the Ryan plan. Reports of Plan’s Fiscal Soundness Rest on Misunderstanding of CBO AnalysisĪssertions that the Ryan plan is fiscally responsible rest on a serious misunderstanding of a Congressional Budget Office (CBO) analysis of the plan. In contrast, most fiscal policy analysts recommend that the debt-to-GDP ratio be stabilized within the next ten years, and at a far lower level. The federal debt would soar to about 175 percent of the gross domestic product (GDP) by 2050. That is, they would pay much smaller percentages of their income in federal taxes.īecause of the Ryan plan’s enormous tax cuts for the affluent, even the very large benefit cuts that the plan would make in Medicare, Medicaid, and Social Security - and the plan’s middle-class tax increases - would not put the federal budget on a sustainable course for decades. The plan would shift tax burdens so substantially from the wealthy to the middle class that people with incomes over $1 million would face much lower effective tax rates than middle-income families would.(These estimated changes in taxes are relative to the taxes that would be paid under a continuation of current policy - i.e., what tax liabilities would be if the President and Congress make permanent the expiring 20 tax cuts and relief from the alternative minimum tax.) For example, households with incomes between $50,000 and $75,000 would face an average tax increase of $900. About three-quarters of Americans - those with incomes between $20,000 and $200,000 - would face tax increases.To offset some of the cost of these massive tax cuts, the Ryan plan would place a new consumption tax on most goods and services, a measure that would increase taxes on most low- and middle-income families. These tax cuts would be on top of those that high-income households would get from making the Bush tax cuts, which are due to expire at the end of 2010, permanent. The richest one-tenth of 1 percent of Americans - those whose incomes exceed $2.9 million a year - would receive an average tax cut of $1.7 million a year.Households with incomes of more than $1 million would receive an average annual tax cut of $502,000. The higher one goes up the income scale, the more massive the tax cuts would be.The Ryan plan would cut in half the taxes of the richest 1 percent of Americans - those with incomes exceeding $633,000 (in 2009 dollars) in 2014.A new analysis by the Urban Institute-Brookings Institution Tax Policy Center (TPC) finds: The tax cuts for those at the very top would be of historic proportions. The plan would replace these health programs with a system of vouchers whose value would erode over time and thus would purchase health insurance that would cover fewer health care services as the years went by. At the same time, the Ryan plan would raise taxes for most middle-income families, privatize a substantial portion of Social Security, eliminate the tax exclusion for employer-sponsored health insurance, end traditional Medicare and most of Medicaid, and terminate the Children’s Health Insurance Program. The Roadmap would give the most affluent households a new round of very large, costly tax cuts by reducing income tax rates on high-income households eliminating income taxes on capital gains, dividends, and interest and abolishing the corporate income tax, the estate tax, and the alternative minimum tax. Paul Ryan (R-WI) - the ranking Republican on the House Budget Committee - released in late January, calls for radical policy changes that would result in a massive transfer of resources from the broad majority of Americans to the nation’s wealthiest individuals. The Roadmap for America’s Future, which Rep.
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