Rep. Paul Ryan Is Lying About His Tax Plan
In an interview with CBS yesterday, House Budget Committee Chairman Paul Ryan (R-WI) claimed his proposed budget does not cut taxes for the wealthy or corporations. That probably comes as a surprise to anyone who has actually read Ryan's "Path to Prosperity," which is full of references to lowering tax rates. As The New Republic's Jonathan Chait has explained, Ryan's budget does, in fact, cut taxes for the rich. There isn't really any question about that — the only question is how Ryan justifies his claims to the contrary. And the answer is: through a combination of duplicity and outright lies.
Let's start with the duplicity:
Q: Do you think that you would be getting more support out there if you didn't include this big tax cut for the wealthy as part of your plan?
RYAN: We're not doing that. So, we're not, we're not agreeing with the president's tax increases.
Ryan never got around to explaining what he meant by that, but he was presumably referring to the scheduled expiration of the tax cuts originally signed by President Bush and extended by President Obama last December. Ryan's argument is that allowing tax cuts to expire as scheduled is a tax increase, and that making them permanent does not count as a tax cut. Nonsense. By that logic, permanently extending the expiring elements of the 2009 stimulus package would not constitute additional spending. But you'd have to be a fool to believe Ryan would apply his tax cut logic to spending. Therefore, Ryan's argument is dishonest and fraudulent.
As Chait notes, Ryan's budget also calls for the repeal of last year's health care reform, which "imposes a 0.9 percent surtax on wages and a 3.8 percent surtax on interest, dividends, and capital gains," both of which "only apply to filers in the top two income brackets." (In 2010, only individuals making more than $171,850 or married couples making more than $209,250 fell into the top two brackets.) Repealing the health care law would therefore lower those taxes for the wealthy. Therefore, Ryan's claim that his budget does not cut taxes for the wealthy is dishonest.
When CBS' Nancy Cordes pointed out that Ryan's budget calls for a huge reduction in top tax rates, Ryan's double-talk really got impressive:
Q: Well, 35 to 25 percent is a big cut.
RYAN: But, in exchange for losing their tax shelters. So, we're saying, we call it revenue neutral tax reform. ... So we're saying, in exchange for losing their tax shelters, the wealthy and corporations get no tax shelters, we lower everybody's tax rates so we have a better economy. So we have better economic growth. So we don't tax our producers more than our foreign competitors tax theirs. So nobody's talking about cutting taxes for the rich. We're talking about reforming the tax code, cleaning it up, keeping revenues where they are. ... The whole point is to clean up the tax code, get rid of tax shelters so we can lower taxes on everybody. That's the kind of tax reform we're talking about.
If you read that closely, you may have noticed that it makes absolutely no sense whatsoever. On the one hand, Ryan claims that the reduced tax rates will be offset by the elimination of tax shelters, and so therefore do not count as a tax cut. On the other hand, Ryan claims that as a result of the changes, we won't "tax our producers more than our foreign competitors tax theirs." Ryan can claim his tax plan reduces U.S. corporate taxes relative to those found in other countries, or that it does not cut taxes on corporations — but if he makes both claims, as he did in the CBS interview, he's clearly lying about one of them.
Likewise, page 50 of Ryan's Path to Prosperity says his budget "draws on the commonly held view that the key to pro-growth tax reform is lowering tax rates while broadening the tax base — that is, letting individuals keep more of the money they earn." Again: Ryan can argue that his plan lets people "keep more of the money they earn," or that his reduction in the top tax rates is fully offset by the elimination of tax shelters — but not both.
Finally, as Chait explained, Ryan is specific about the tax rate reductions he favors, but vague about the shelters and loopholes he'd close, making his claims of revenue neutrality impossible to credit:
Ryan implies that his plan would leave the rich paying the same effective tax rates as they do now because he's "getting rid of loopholes and deductions, which by the way are enjoyed by the top [tax] rate filers, the people in the top two brackets." But he hasn't put out any details. [...]
The Tax Policy Center examined various proposals to reduce tax deductions while using the revenue to lower rates across the board. All the plans decreased the tax burden for the top-earning 1%. The problem is that tax deductions are just not worth as much to very rich people as low tax rates.
Finally, Ryan claims that his tax proposals are just like those found in the Simpson-Bowles fiscal commission:
The tax reform we're proposing is just like the tax reform the president's bipartisan fiscal commission is proposing, supported by the majority of Democrats on the fiscal commission.
[T]he Commission relies too heavily on revenue increases, $2 trillion over decade, with the tax collections reaching 21 percent of gross domestic product [GDP]. Increasing the government's take from the economy hinders growth, and the lack of comprehensive health care spending reforms and a cap on total spending ensures that these revenues will chase higher spending and not be used for deficit reduction.
That was Paul Ryan last December. Now he pretends his tax proposals are "just like" the commission's proposals. He knows they aren't. He's lying in order to pretend his plan isn't a far-right fantasy. (Just like when he claims Alice Rivlin supports his attempt to replace Medicare with a voucher system.)
It should long ago have become obvious that Paul Ryan is neither "serious" nor "brave." His misrepresentation of his own tax plan shows that he isn't principled, either.