The plan is to cut taxes on the rich and to pay for the tax cuts by doing away with any tax benefits or loopholes the middle class enjoys.
Soak The Middle Class | TPM Editors Blog
Republicans want to dramatically lower the top tax rate and eliminate brackets so there are only two — one at 25 percent, one at 10 percent. That would put a huge amount of cash in the pockets of high income earners. For middle class earners, it’d be a much more modest sum. To make the plan revenue neutral, Ryan claims Republicans would close myriad loopholes that disproportionately benefit the upper-middle and upper classes — he just won’t say which ones.
The rub is that Ryan’s tax cuts are expensive and to pay for ithem he’d likely have to clawback the biggest middle-class tax benefits — like the mortgage interest deduction, and the tax exclusion on employer health benefits — such that the net effect for people making less than $200,000 would be a higher annual tax burden. The plan redistributes wealth upwards.
Republicans could conceivably cap the tax breaks, such that middle class people get to keep them, and only high-income earners have to give them up. But then they’d have to ditch other priorities like lowering or eliminating taxes on investment income that are, importantly, key pieces of Mitt Romney’s tax plan.
The important thing to keep in mind is that this isn’t unique to Paul Ryan’s budget. It was, to a greater or lesser extent, an implicit consequence of all the tax plans the serious GOP presidential primary contenders put forward — huge tax cuts for the wealthy that would either blow up the deficit or require the middle class to pony up more. In a way it was the unifying principle at the core of all their plans. They differed in many other ways, but in a redistributive sense they were all variations on a single theme. Super Committee Republicans wanted to pull the same trick. They can’t talk about it in blunt terms, but as far as conservatives are concerned, upward redistribution is a feature, not a bug.