Paul Ryan's tax numbers: Just 'magic asterisks'? (+video)
Paul Ryan's proposed budget envisions lower and simpler tax brackets even as it projects tax revenues as a higher percentage of GDP. Some suggest he'll need magic as well as math to get there.
Rep. Paul Ryan’s new budget doesn’t contain minute tax reform details. That’s not really his job – the Wisconsin Republican heads the House Budget Committee, after all. Taxes are the purview of House Ways and Means, whose chairman, Rep. Dave Camp (R) of Michigan, has vowed to produce a plan to remake the tax code at some point in the near future. Ryan’s waiting to follow Camp’s lead.Skip to next paragraph
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That said, the Ryan plan contains an interesting tax outline. Ryan’s laid out some revenue and reform goals that in some ways are more interesting than many of his spending top lines.
First, there’s the revenue totals. Ryan’s fiscal year 2014 plan assumes collection of about $3.2 trillion more in taxes than did last year’s FY 2013 version. Partly that’s because the economy is getting better and producing more tax payments, per the Congressional Budget Office predictions that underlie Ryan’s work. But the Republican former vice presidential candidate also assumes that Uncle Sam will be corralling a bigger share of the US economy in coming years.
In 2023, when Ryan’s budget is supposed to reach balance, he has the US government getting taxes equal to about 19.1 percent of that year’s GDP. That’s higher than the equivalent number from last year’s Ryan effort, 18.7. Two years ago Ryan figured the government would be getting 18.1 percent of GDP in taxes 10 years out.
Republican orthodoxy is that taxes as a share of GDP should be going down, not up.
What’s happened here? Well, Ryan vowed that this time his budget would balance within a decade, and that’s a tough thing to accomplish. Look at it this way: his budget would repeal Obamacare, including its taxes on top earners meant to fund government health-care subsidies for those less well off. Ryan’s plan also would remake the income tax code so it only has two rates (more on this in a second). The top rate would be 25 percent as opposed to today’s 39.6 percent, which was just established in the fiscal cliff deal. Yet Ryan still counts the cash the Obamacare tax and 39.6 percent top rate would bring in.