Published: March 31, 2012
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CloseDiggRedditTumblrPermalink Congressman Paul Ryan, the author of
the House Republican budget, is not the first politician to go long on
promises and short on details. But his budget, which passed the House
last week with no Democratic votes, takes untruth in taxes to a new
level.
Related in Opinion
Room for Debate: The Ryan Budget: Policy, or Just Politics? (March 27,
2012) Mr. Ryan claims that he can drastically cut income tax rates
without adding to the deficit, but he hasn't specified how he would
make up the lost revenue, an estimated $4.6 trillion over 10 years.
Instead, he has said he would end or reduce unnamed deductions,
exemptions and loopholes and defended this dodge by saying that he
first wants to build consensus for the concept of pairing lower rates
with fewer write-offs. That's already a mainstay of many tax reform
plans.
The problem is that politicians' most cherished constituencies are big
recipients of the most cherished tax breaks — including the exclusion
for employer-provided health insurance; deductions for mortgage
interest, state and local taxes and charitable donations; tax deferral
for retirement savings; and special low taxes on investment income.
With some 70 percent of an annual $1.1 trillion in tax breaks flowing
to the top 20 percent of taxpayers, and 20 percent going to the middle
rung, politicians are loath to champion the end of specific tax
breaks.
Another problem is that ending tax breaks would not end the need for
government to help with many of the activities subsidized by the tax
code, like employee health insurance and retirement savings. Tax
subsidies may not be the most efficient or fairest way to support
social and economic goals, but there is a need for public efforts to
help achieve many of their aims.
The question is how much can reasonably be saved by ending or reducing
tax breaks. A new analysis by the Congressional Research Service puts
the savings at $100 billion to $150 billion a year. The aggressive
deficit reduction plan by the Bipartisan Policy Center, a
Washington-based think tank, would generate $3.5 trillion in savings
to 2020. A proposal by President Obama, scorned by Republicans, would
raise $584 billion in 10 years by capping deductions for high-income
taxpayers.
The upshot is that Mr. Ryan will never come up with a workable way to
pay for his $4.6 trillion tax cut. And even if he found substantial
offsets, it would be obscene to use the money to lower tax rates for
rich taxpayers when the nation is starved for investment in jobs,
education and infrastructure. What's needed is a realistic approach,
starting with letting the high-end Bush era tax cuts expire at the end
of this year and closing blatant loopholes, including the
unconscionably low tax rate for private equity partners. Raising taxes
on the rich is not a cure-all, but there will never be consensus for
broad reform without first ending the lavish tax breaks at the top.
Realism also requires new tax sources, including a financial
transactions tax. But being realistic is not Mr. Ryan's style.
More:
http://www.nytimes.com/2012/04/01/opinion/sunday/tax-fantasy.html?ref=opinion
--
Together, we can change the world, one mind at a time.
Have a great day,
Tommy
--
Together, we can change the world, one mind at a time.
Have a great day,
Tommy
--
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