“Can you declare anything off-limits?” Martha Raddatz, the moderator of last week’s vice presidential debate, asked Republican vice presidential nominee Paul Ryan.
The question about which middle-class tax breaks Ryan would preserve seemed to stump the Janesville congressman, even though he chairs the House Budget Committee and is known as a serious numbers wonk.
Ryan didn’t offer details because the budget blueprints he and his running mate, Mitt Romney, have created simply don’t add up—unless the middle class loses almost 60% of the tax breaks that have a major impact on their household budget.
These tax breaks help families pay for child care, college tuition, home mortgages and more.
Romney and Ryan say that they want to lower everyone’s tax rates by 20%, reduce the corporate tax rates by 40%, and eliminate enough tax loopholes to make up the $5 trillion tax hole they’re putting on the table.
Romney and Ryan haven’t specified which loopholes they’d close to “broaden the base,” as they put it.
In the debate, Raddatz provided Ryan an opportunity to be specific about which tax breaks he and Romney would preserve or eliminate, but Ryan stammered that he wanted to fill in the details with Congress after the election. After Vice President Joe Biden got a good chuckle out of that, Ryan then made a weak pledge that he and Romney would reduce tax breaks for high-income earners.
But Ryan’s promises don’t pan out in the real world.
And they will have a real impact on Wisconsin’s middle-class families.
A Tax Hike for the Middle Class
The Romney-Ryan plan would extend the Bush tax cuts for everyone—including high-income earners—and add even more tax cuts to the mix.
The tax breaks the Republican ticket is offering would primarily benefit the wealthy, such as reducing the corporate income tax rates, ending taxation of profits earned overseas through offshoring, permanently ending the estate tax, and preserving tax loopholes that favor hedge fund managers and other Wall Street millionaires.
The Romney-Ryan plan would offer $1.9 trillion in new tax cuts to the richest 1% over the next 10 years, according to calculations by the Center for American Progress.
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Since these Romney-Ryan high-income tax breaks would be “off-limits,” as Raddatz put it, and Romney and Ryan have promised to increase defense spending, they can only balance their budget by slashing tax breaks that help the middle class.
The Tax Policy Center—headed by George W. Bush’s former economic adviser Donald Marron—found that tax breaks for middle- and low-income families would have to be cut by 58% to pay for the tax hole created by Romney and Ryan’s plan.
Romney and Ryan promise to cut everyone’s taxes by 20%, which would disproportionately benefit the very wealthy. And, in reality, families who earn less than $200,000 would likely have to pay $2,000 more in taxes to pay for the tax hole created by giving these increased tax breaks to the top 1%.
How Will Romney-Ryan Plan Affect Wisconsin Families?
Although Romney and Ryan have failed to fill in the details, the Center for American Progress did, and it identified which middle-class tax breaks could be affected if the 58% reduction were to kick in:
n Taxes on employer-sponsored health insurance: Insurance obtained through one’s employer is currently not taxed. But if 58% of this exemption were to be done away with, 3.1 million Wisconsin families would pay an additional $1,300 to $2,100 in taxes annually.
n Mortgage interest deduction: Approximately 761,000 Wisconsin families would lose an average of $1,066 from this deduction.
n State and local tax deductions: Currently, about 946,000 middle-class Wisconsinites deduct their state and local taxes from their federal taxes. But if Romney and Ryan cut this deduction by 58%, these folks would have to pay $670 more to the federal government.
n Child tax credit: More than 460,000 middle-class Wisconsin families currently utilize this deduction. But a 58% cut equals a $580 tax hike for each child.
n Child care tax credit: About 99,000 families in Wisconsin would have to pay an additional $318 per child if this tax credit were to be reduced by 58%.
n Earned income tax credit and child tax credit: Romney and Ryan propose to roll back Obama’s additions to these tax credits. That means 155,000 families in the state—with 320,000 children—would have to pay an additional $898 in federal taxes.
n Obama’s American Opportunity Tax Credit: Romney and Ryan want to eliminate this tax credit, which helps families and students pay their college tuition. That translates into a $2,100 loss for 159,000 Wisconsin individuals.
Although the average Wisconsinite would pay more taxes, Romney and Ryan would give the 3,400 millionaires in the state an additional $87,000 in tax breaks, the Center for American Progress found.
No wonder why Ryan didn’t want to discuss the details of his plan.
