Senator Pat Toomey (R-PA) pounced on CNN's Soledad O'Brien this week when she raised findings from an analysis that CBPP issued last fall of the tax plan that the senator proposed to the congressional "super committee." Senator Toomey asserted that a finding that O'Brien cited -- that his tax plan would raise taxes on people making less than $200,000 -- was "factually wrong and ridiculous."
Really? Let's take a look:
In presenting his plan to the super committee, Senator Toomey indicated it would:
Nor would that outcome be terribly surprising. With regard to tax expenditures, the Toomey plan shields the most lucrative tax expenditure for high-income people -- the preferential tax rate on capital gains -- while limiting key tax expenditures that lower- and middle-income people use, such as the child tax credit and employer-provided health insurance. Indeed, Feldstein's own estimates show that nearly three-fifths (71 percent) of the revenue that his proposal to limit tax expenditures -- the model for the Toomey plan -- would produce would come from people with incomes under $200,000.
Moreover, the Joint Committee for Taxation (JCT), Congress' official, impartial "scorekeeper" on tax legislation, examined a plan similar to Senator Toomey's -- one that would cut tax rates to about one-seventh below the Bush tax rates, setting the top rate at 30 percent (Senator Toomey's top rate is 28 percent), fully offset the costs of cutting tax rates by reducing tax expenditures (the Toomey plan would go further and limit tax expenditures enough to produce $290 billion in net revenue increases for deficit reduction), and retain the current preferential tax rates for capital gains and dividends (as the Toomey plan would do). JCT found people making more than $200,000 would receive large tax cuts while those making less than $200,000 would, on average, face tax increases.
The only way that Senator Toomey's plan could avoid raising taxes on people with incomes below $200,000 would be if he designed it in such a way that it lost significant revenue overall and, thus, added significantly to the deficit. Given its tax cuts for people at high income levels, it must either raise taxes on middle-income families or increase the deficit. It cannot achieve the conflicting goals that Senator Toomey claims for it.
That would become evident if Senator Toomey turned his proposal, which is still not available on paper, into a specific plan and sent it to JCT for analysis.
This post originally appeared on the Center on Budget and Policy Priorities' blog, Off the Charts Blog (www.offthechartsblog.org).
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It would get rid of the tax exempt status of employer-provided insurance. The Heritage Foundation recommended this in about 2008. Current estimates are that per-employee costs of employer sponsored iinsurance are about $15,000 annually, of which the employer pays $11,000, with the employee paying the rest.
That $11,000 is considered employee compensation, tax-free. Getting rid of the exemption would mean every employee with employer-provided insurance would end up being taxed on an additional $11,000 he never saw in his pocket. An employee making $39,000 would be taxed as if he'd made $50,000. That's a significant tax increase just on the income alone, and more of a tax increase for those who are thus pushed into a higher tax bracket.
But anyone who believes the GOP when they say they won't raise taxes on the middle class and poor is falling for lies, plain and simple. In states with radical GOP governors, some, like Kansas, have already lowered taxes on the wealthy and on corporations while raising them for the middle class and even more for the poor. THAT'S the GOP plan, unmasked.