WASHINGTON -- The budget outline introduced by House Budget Committee Chairman Paul Ryan (R-Wis.) on Tuesday would witness a massive reduction in tax revenues across the board in all years during the next decade except one.
Under Ryan's plan, tax revenues would actually increase $49 billion in 2012 when compared to the proposal introduced by President Barack Obama. From 2013 to 2022, by contrast, the Ryan plan would cut revenues by $2.036 trillion more than the president's plan would.
The most logical explanation for this immediate hike in revenue is that Ryan's proposal doesn't extend the tax cuts that the president called for in his budget. That includes giving businesses a 10 percent credit for creating new jobs and increasing wages or allowing business to do a 100 percent write off of depreciation for certain purchases.
Instead, Paul's tax incentives all occur beyond the 2012 window. Whereas the president allows for the Bush-era tax cuts on top-level earners to expire, institutes a minimum tax rate for millionaire income, and hikes rates on capital gains, Paul goes the opposite direction. His plan turns the six current individual tax brackets into two, subjecting them to a 10 percent income tax and a 25 percent one. He reduces the corporate rate to 25 percent, eliminates some loopholes and shifts to a "territorial" tax system that is designed to encourage companies to bring back foreign earnings.
It's an approach that Democrats have deemed patently unfair, as it lowers rates for the wealthy and requires dramatic spending cuts elsewhere simply to keep pace on budget neutrality. The 2012 revenue projections provide another point of contention. Ryan and others in the GOP tent most likely support, at least philosophically, the tax credits included in Obama's plan. But their budget doesn't include that specific jolt to the economy.
In the past, Ryan has warned "there is no economist on the planet, whether Keynesian, supply-side or somewhere in between, who would suggest proposing tax increases in the midst of one of the most painful recessions in a generation." The added 2012 revenue in Ryan's plan wouldn't technically be considered an increase, since the baseline is not the current budget but rather the president's un-implemented plan.
A request for comment to Ryan's office wasn't immediately returned.
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