WASHINGTON, D.C. – Today, U.S. Senator Bob Casey, Chairman of the Joint Economic Committee (JEC), released a JEC report finding that Representative Paul Ryan’s Fiscal Year 2013 Budget proposal would give large tax cuts to the wealthiest Americans while increasing the tax burden on the middle class.
The report, entitled “Winners and Losers: Understanding the Ryan Plan’s Potential Tax Implications for America’s Workers,” analyzes the impact on families of House Budget Committee Chairman Paul Ryan’s proposal to replace the current progressive tax code with just two tax brackets – 10 percent and 25 percent – while eliminating the alternative minimum tax.
The report finds that the top 0.1 percent of households would receive an estimated average federal tax cut of nearly $1.18 million in 2015 under the Ryan plan, corresponding to a 14.1 percentage point drop in the federal tax rate. Lower-income earners (the bottom quintile) would see the slightest tax savings of only $67 and would enjoy just a 0.06 percentage point drop in their federal tax rate.
To pay for the tax cuts, the JEC report finds, Ryan would potentially have to eliminate tax expenditures that deliver significant tax benefits to middle-class workers. These include tax deductions for mortgage interest, state and local taxes, and charitable contributions as well as the tax exclusions for employer-sponsored health insurance benefits and contributions to 401(k) plans.
After eliminating these tax expenditures, those at the top of the income ladder would still experience a net reduction in taxes – the typical household making more than $1 million will see their taxes fall by more than $286,000 under Ryan’s budget. However, eliminating these tax expenditures would increase the tax burden facing middle-class workers: a household making between $50,000 and $100,000 would face a tax increase of at least $1,358.
“We’ve seen this movie before and it doesn’t end well,” said JEC Chairman Casey. “The Ryan plan doles out tax cuts for the wealthy and asks the middle class to pick up the bill. This new JEC report makes clear that the middle class will be hit hard by the Ryan proposal. To pay for his tax cuts, Chairman Ryan has no choice but to eliminate or drastically reduce tax benefits that help middle-class families meet their health care needs, pay for their homes, and save for their retirement. This is the wrong approach. As we recover from the Great Recession, our focus must be on creating jobs and helping middle-class families – not giving the wealthiest few more tax breaks.”