The Tax Policy Center has crunched the numbers and found that Paul Ryan would need to somehow account for $5.7 trillion in missing revenue to make up the tax cuts present in the third incarnation of the Path to Poverty.
Furthermore, as you may have guessed Ryan’s budget would also generate a massive windfall for the 1 percent while dispensing scraps to the rest of us.
The Tax Policy Center estimates that cutting individual rates to 10 percent and 25 percent, repealing the Alternative Minimum Tax and the tax increases included in the Affordable Care Act, and cutting the corporate rate from 35 percent to 25 percent would add $5.7 trillion to the deficit over the next decade. Thus, if House Republicans want to cut these taxes and still collect the revenues they promise, they’d have to raise other taxes by $5.7 trillion.
The tax cuts described in Ryan’s budget would generate a huge windfall for high-income taxpayers. On average, households would get a cut of $3,000. But those in the top 0.1 percent of income, who make $3.3 million or more, would get a whopping $1.2 million on average–a 20 percent increase in their after-tax income.
By contrast, middle-income households would get an average tax cut of about $900. Those in the bottom 20 percent (who make $22,000 or less) would get $40 and one-third of them would get no tax cut at all.
The Tax Policy Center notes that because Paul Ryan has singled out cuts he would make, but has not identified how he would raise revenue, they cannot account for the $5.7 trillion hole.
The Center does speculate, however, and estimates that Ryan would be forced to eliminate or reduce very popular tax expenditures such as tax breaks on combat pay for service-members to make up for the massive hole in his budget. It’s unlikely Ryan would concede to that so we must assume he intends to rely on magic asterisks that will generate revenue through osmosis.