Paul Ryan's tax plan would have saved the presumptive Republican vice presidential candidate and his wife Janna about $22,000 in 2011, a calculation by The Huffington Post found.
In 2011, Ryan and Janna paid $64,764 in taxes on income of $323,416, according to tax returns released Friday afternoon. If the tax code were rewritten as Ryan has proposed -- raising taxes for many lower-income taxpayers while reducing the tax burden for the wealthiest Americans, critics charge -- the family would owe about $43,000 in taxes.
Ryan released his tax filings, which also include his return for 2010, in the midst of a controversy over whether his would-be boss should make public more of his own tax returns. Last week, Mitt Romney, who has thus far released his 2010 return and an estimated return for 2011, told reporters that he paid no less than 13 percent of his income in taxes for the past decade, in an effort to defuse an issue that has threatened to overshadow his economic message.
Romney pays a lower rate than most middle-class taxpayers because most of his income comes from investments, which are taxed at a lower rate than traditional income. If his running mate had his way, Romney would pay much less.
Ryan's plan would eliminate taxes on capital gains, on dividend income and on interest income, and would also do away with the alternative minimum tax. It would then tax everyone at one of two rates -- 10 percent for joint filers with income up to $100,000 a year; 25 percent on income above that level. The federal government would recoup some, but not all, of the lost revenue through the elimination of most deductions, including the popular mortgage interest deduction and the deduction for charitable giving.
Ryan has said his plan would make the tax system flatter and simpler. Democrats have said killing the 15 percent capital gains tax would amount to a huge windfall to top earners. Romney, according to one estimate, would pay less than 1 percent of his income in taxes under the Ryan plan.
The Ryans would benefit, too, but not nearly as much. That is because they land, income-wise, on the fulcrum between the middle class and the very wealthy. Their income comes mostly from two sources -- Paul Ryan's salary as a U.S. representative and investments inherited by Janna when her mother died in 2010.
“These are properties Rep. Ryan ‘married into,’ for lack of a better term,” Ryan spokesman Kevin Seifert told the Milwaukee Journal-Sentinel. “He does not play an active role in them and has no plans to.”
The investment earnings helped push the couple's income up to six-and-a-half times the median income of about $51,000 in 2011. (That puts them in the top 3 percent of all earners, but they are paupers in comparison to Romney and his wife Ann, who with an estimated income of nearly $21 million in 2011 earned 409 times the median household income -- more each day than most families made all year).
The Ryans in 2011 benefited from $51,242 in deductions from mortgage interest, charitable giving and previous tax bills. While the couple would lose those deductions, their base income would also not be as high. That's because they would no longer be taxed on $50,550 from gains on the sale of stock, or on dividend and interest income earned from other investments. They would also benefit from an increased standard deduction: $25,000 as joint filers, plus $3,500 each for the couple and their three children.
All told, their tax bill would drop by about $22,000 if the deductions were eliminated and they no longer had to claim investment income. (This calculation does not take into account what the elimination of the current corporate tax under the Ryan plan might have on the income they earn through investments, nor does it include a tax credit most families would receive to purchase health care).
Middle-class earners, in contrast, would see their tax bill rise sharply under the Ryan plan, according to a report published earlier this summer by the Joint Economic Committee of Congress, authored by Sen. Robert Casey Jr. (D-Pa.).
The average annual tax burden for earners in the $50,000 to $100,000 range would climb $1,358. Taxpayers in the $100,000 to $200,000 range would owe $2,257. Meanwhile, those making more than $1 million a year would save, on average, $286,543.
Earners in the Ryans' peer group, those who earn $200,000 to $500,000, would save on average $2,257, according to the Joint Economic Committee report.
Rep. Kevin Brady (R-Texas), vice chairman of the committee, has disputed its findings, saying that the report used data from the nonpartisan Tax Policy Center, which defines income and taxes "significantly differently than the IRS data used elsewhere," according to ABC News.
Ryan's tax plan as written, of course, is at a significant distance away from reality. Such a drastic restructuring would probably have a tough time getting through even a Republican-dominated Congress unscathed, and besides, Romney has his own ideas. Though short on detail, Romney's proposed rewrite of the tax code would cut rates by 20 percent for everyone, and also eliminate the estate tax, the alternative minimum tax and the capital gains tax for all but wealthy taxpayers, he has said.
The nonpartisan Tax Policy Center found that in order for the tax plan to be revenue neutral, as Romney's advisers claim, it, too, would cause tax bills to rise for lower-income taxpayers -- a charge that Romney has vigorously disputed.
In a recent interview with Brit Hume of Fox News, Ryan suggested that tax policy specifics would come after the election.
"That is something that we think we should do in the light of day, through Congress," Ryan told Hume, promising to "have a process for tax reform so that we do this in the front of the public. ... [W]e want feedback from Americans about what priorities in the tax code should be kept, and what special interest loopholes we want to get rid of."
CORRECTION: In calculating the Ryans' likely tax burden under the plan previously put forward by the Republican vice presidential candidate, The Huffington Post failed to apply the lower 10 percent tax rate to the first $100,000 of their taxable income, and instead applied the 25 percent rate to the entire amount. That served to underestimate their likely tax savings by about $15,000. The story is revised to reflect the new calculation.
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