Ryan Budget Would Raise Some Taxes; Guess Who Gets Hit?

April 12, 2012 at 2:26 pm

You’ve undoubtedly heard lots about how House Budget Committee Chairman Paul Ryan’s budget plan would give millionaires an average $265,000 apiece in new tax cuts, on top of the $129,000 apiece they would get from Ryan’s call to extend President Bush’s tax cuts. Have you also heard, however, that he wants to raise taxes for some other Americans?  Want to guess who would bear the brunt of his tax hikes?

The Urban-Brookings Tax Policy Center has published new numbers that show the Ryan plan would raise taxes on low-income working families — those making up to $30,000 a year.  That’s because, while he would extend the Bush tax cuts, which are due to expire at the end of this year, he would not extend President Obama’s tax cuts for those with the lowest incomes, which will expire at the same time.  Our updated report gives the details.

Chairman Ryan’s proposed tax hikes on low-income Americans would come even as, on the spending side, his budget would slash programs that assist this same population.

Specifically, people with incomes below $10,000 would see their after-tax incomes fall by 2 percent, on average.  But people with incomes above $1 million would see their incomes rise by 12.5 percent (see graph).

Ryan Plan Would Cut Taxes Deeply at the Top, Raise Them at the Bottom

While making permanent the Bush tax cuts, which disproportionately benefit people at the top of the income scale, Chairman Ryan also would cut marginal tax rates even below the Bush levels.  In fact, his plan would drop the rate for very wealthy individuals to its lowest level since Herbert Hoover’s presidency.

Chairman Ryan says his plan would fully offset the cost of his proposed tax cuts by closing tax expenditures (tax credits, deductions, and other preferences) for high-income households.  But he hasn’t said what tax expenditures he would cut.

By raising taxes on low-income Americans and cutting programs that help them, while giving high-income people large tax cuts, the Ryan budget would significantly worsen inequality and reduce opportunity.

Here’s some of what would happen:

A single mother with two kids struggling to make ends meet by working full-time at the minimum wage would lose $1,500 (over 80 percent) of her child tax credit; she could lose some or all of her food stamps as well.  Meanwhile, Pell Grants, which help students from poor families attend college, would also face cuts, making it harder for striving low-income children to make it into the middle class.

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More About Chuck Marr

Chuck Marr

Chuck Marr is the Director of Federal Tax Policy at the Center on Budget and Policy Priorities.

Full bio | Blog Archive | Research archive at CBPP.org

9 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. DJK #

    This is stupid, if you’re making $10000 a year Ryan just wants you to pay a whopping $200 a year. That’s it. Cry me a freaking river!

  2. 2

    I find it ironic that Ryan wants to cut the very programs he received funds from when his father unfortunately passed. Despite coming from a wealthy family, he drew social security until college. Now that he’s made it, he wants to shut the door on others.

  3. David K. #

    I don’t get it how some of you Dem out there love the fact Obama has put us deeper into a hole, he has nothing to run on so he’s making up things that are not even close to being true. Zombie Dem, you falling all over Obama feet like lap dogs to there owners. Sad.

  4. TDP #

    How does this explain that 50% of tax filers pay no tax. And a Significant number that paid absolutely NO federal tax receive up to $4,000 in Earn Income Credit.

    • Jeremy Neil #

      … I don’t know where you get that statistic, but the fact is 84% of Americans pay taxes.

      Your argument is invalid.

  5. LA-CC #

    If the taxpayer meets certain criteria, they are allowed a refundable additional child tax credit – $1000 per child.

  6. Fred Marki #

    40 hrs x 52 weeks x $10 = $20,800

    Head of household standard deduction is $8,500
    3 exemptions x $3,700 is $11,100

    Taxable income of $1,200

    Tax is $121.

    How is the child tax credit benefiting this taxpayer?

    Also, looks like Ryan plan has $12,500 standard deduction and $3,500 exemption, so taxable income will be zero.


    • Bill Holden #

      Wow! Ryan gives the mother of three a whole $121/yr pay increase (121/20800=.0058 = .58%)!! But the poor rich people get just $265000 increase (265000/1000000=.265 = 26.5%). I really think we should give the elite a bigger increase so they can create more jobs for the rest of us.

      Regards to you too.

      • Tell_the_truth #

        As usual, libs change the argument when their point is adequately refuted. Since we’ve proven that there is no tax increase on the poor, now the reduction is too small. Here’s the difference – the poor person is being GIVEN money after paying no taxes – the “rich” person is only having less stolen from them…

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