Paul Ryan's tax plan would lower his (and Mitt Romney's) taxes

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Alissa_Sal's picture
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Paul Ryan's tax plan would lower his (and Mitt Romney's) taxes

Paul Ryan Would Likely See Healthy Tax Cut Under His Tax Plan

Paul Ryan's tax plan would have saved the presumptive Republican vice presidential candidate and his wife Janna about $7,100 in 2011 -- enough to knock their effective tax rate down from 20 percent to less than 18 percent, a calculation by The Huffington Post found.

In 2011, Ryan and Janna paid $64,764 in taxes on income of $323,416, according to tax returns released Friday afternoon. If the tax code were rewritten as Ryan has proposed -- raising taxes for many lower-income taxpayers while reducing the tax burden for the wealthiest Americans, critics charge -- the family would owe $57,591 in taxes.

Ryan released his tax filings, which also include his return for 2010, in the midst of a controversy over whether his would-be boss should make public more of his own tax returns. Last week, Mitt Romney, who has thus far released his 2010 return and an estimated return for 2011, told reporters that he paid no less than 13 percent of his income in taxes for the past decade, in an effort to defuse an issue that has threatened to overshadow his economic message.

Romney pays a lower rate than most middle-class taxpayers because most of his income comes from investments, which are taxed at a lower rate than traditional income. If his running mate had his way, Romney would pay much less.

Ryan's plan would eliminate taxes on capital gains, on dividend income and on interest income, and would also do away with the alternative minimum tax. It would then tax everyone at one of two rates -- 10 percent for joint filers with income under $100,000 a year; 25 percent for everyone else. The federal government would recoup some, but not all, of the lost revenue through the elimination of most deductions, including the popular mortgage interest deduction and the deduction for charitable giving.

Ryan has said his plan would make the tax system flatter and simpler. Democrats have said killing the 15 percent capital gains tax would amount to a huge windfall to top earners. Romney, according to one estimate, would pay less than 1 percent of his income in taxes under the Ryan plan.

The Ryans would benefit, too, but not nearly as much. That is because they land, income-wise, on the fulcrum between the middle class and the very wealthy. Their income comes mostly from two sources -- Paul Ryan's salary as a U.S. representative and investments inherited by Janna when her mother died in 2010.

?These are properties Rep. Ryan ?married into,? for lack of a better term,? Ryan spokesman Kevin Seifert told the Milwaukee Journal-Sentinel. ?He does not play an active role in them and has no plans to.?

The investment earnings helped push the couple's income up to six-and-a-half times the median income of about $51,000 in 2011. (That puts them in the top 3 percent of all earners, but they are paupers in comparison to Romney and his wife Ann, who with an estimated income of nearly $21 million in 2011 earned 409 times the median household income -- more each day than most families made all year).

The Ryans in 2011 benefited from $51,242 in deductions from mortgage interest, charitable giving and previous tax bills. While the couple would lose those deductions, their base income would also not be as high. That's because they would no longer be taxed on $50,550 from gains on the sale of stock, or on dividend and interest income earned from other investments. They would also benefit from an increased standard deduction: $25,000 as joint filers, plus $3,500 each for the couple and their three children.

All told, their tax bill would drop by about 11 percent if the deductions were eliminated and they no longer had to claim investment income. Middle-class earners, in contrast, would see their tax bill rise sharply under the Ryan plan, according to a report published earlier this summer by the Joint Economic Committee of Congress, authored by Sen. Robert Casey Jr. (D-Pa.).

The average annual tax burden for earners in the $50,000 to $100,000 range would climb $1,358. Taxpayers in the $100,000 to $200,000 range would owe $2,257. Meanwhile, those making more than $1 million a year would save, on average, $286,543.

Earners in the Ryans' peer group, those who earn $200,000 to $500,000, would save on average $2,257, according to the Joint Economic Committee report.

Rep. Kevin Brady (R-Texas), vice chairman of the committee, has disputed its findings, saying that the report used data from the nonpartisan Tax Policy Center, which defines income and taxes "significantly differently than the IRS data used elsewhere," according to ABC News.

Ryan's tax plan as written, of course, is at a significant distance away from reality. Such a drastic restructuring would probably have a tough time getting through even a Republican-dominated Congress unscathed, and besides, Romney has his own ideas. Though short on detail, Romney's proposed rewrite of the tax code would cut rates by 20 percent for everyone, and also eliminate the estate tax, the alternative minimum tax and the capital gains tax for all but wealthy taxpayers, he has said.

The nonpartisan Tax Policy Center found that in order for the tax plan to be revenue neutral, as Romney's advisers claim, it, too, would cause tax bills to rise for lower-income taxpayers -- a charge that Romney has vigorously disputed.

In a recent interview with Brit Hume of Fox News, Ryan suggested that tax policy specifics would come after the election.

"That is something that we think we should do in the light of day, through Congress," Ryan told Hume, promising to "have a process for tax reform so that we do this in the front of the public. ... [W]e want feedback from Americans about what priorities in the tax code should be kept, and what special interest loopholes we want to get rid of."

I will be the first to admit that I don't really know how you would get around it (somebody has to do the voting, and we all pay taxes, so presumably there is always going to be room for voting in your own self interest there) but is it fair that pretty much only rich guys get to set the tax rates? I mean, it seems kind of like a no brainer that they would probably vote for stuff that would lower their own taxes, right? Fair or unfair? Do you think they are doing a good job of it? Discuss.

AlyssaEimers's picture
Joined: 08/22/06
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I have not read up on the tax plan, but for now I am going to say any tax plan is better than no tax plan. Over $57,000 a year in taxes is still a lot of money.

As an aside, I can't seem to get excited about either candidate. I will propably vote for Romney, but I wish there was someone different.

mom3girls's picture
Joined: 01/09/07
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Ryan's current plan does not still have these tax cuts. Also Romney has said he does not support the cut to the capital gains tax, so it is really a moot point.

If the Ryan tax plan of 2010 were still in play I would have to see the rest of the changes to see if I felt it balanced out before I could say whether or not I agreed.

Alissa_Sal's picture
Joined: 06/29/06
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So, the article inspired me, and we can debate this specific tax plan if you like, but my question is more "in general" and definitely not limited to the Republicans (as pretty much everyone in Congress is better off than your average American.) Is it fair to let one class of people make all of the decisions about the tax code, including their own tax rates? I mean, if only middle class people were in Congress, would taxes for the middle class be higher or lower?

Alissa_Sal's picture
Joined: 06/29/06
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"mom3girls" wrote:

Ryan's current plan does not still have these tax cuts. Also Romney has said he does not support the cut to the capital gains tax, so it is really a moot point.

If the Ryan tax plan of 2010 were still in play I would have to see the rest of the changes to see if I felt it balanced out before I could say whether or not I agreed.

I was trying to research what tax cuts have been removed since all of the articles I have seen on this are really recent (like within the past day or so. Just for my own education, can you point me to something that shows a more current plan? Thanks!

Joined: 04/12/03
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"AlyssaEimers" wrote:

I have not read up on the tax plan, but for now I am going to say any tax plan is better than no tax plan. Over $57,000 a year in taxes is still a lot of money.

As an aside, I can't seem to get excited about either candidate. I will propably vote for Romney, but I wish there was someone different.

it's a lot of money for me, but not so much for him. Once you reach a certain level, it doesn't hurt/you don't notice it as much. Right now I have to calculate how much gas I can use. Can I afford to make an extra trip 12 miles one way or do I need to wait until I need things at 4 of the stores there? I know how many hours I have to work to fill my tank while others in my communitity are calculating the number of hours they have to work for 1 gallon of gas. I don't think Romney is thinking about this. When you have to think about spending almost a week's worth of pay on gas, you're just not in the same place the Romney's are.

mom3girls's picture
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"Alissa_Sal" wrote:

So, the article inspired me, and we can debate this specific tax plan if you like, but my question is more "in general" and definitely not limited to the Republicans (as pretty much everyone in Congress is better off than your average American.) Is it fair to let one class of people make all of the decisions about the tax code, including their own tax rates? I mean, if only middle class people were in Congress, would taxes for the middle class be higher or lower?

I think that those that are in power, making decisions on their own tax rate, are "supposed" to be doing what is best for constituents not themselves. I do not believe that to be the truth, but I dont believe the choices they make are for themselves either. I think that 9 times out of 10 they make choices based on what they think will get them re-elected. Even if we put people from the middle class in office it would probably be the same. I am not sure what the answer to this issue is, term limits may or may not help.

mom3girls's picture
Joined: 01/09/07
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His current proposal is fairly vague, but it points to a systems with either a 25% or 10% tax rate, with everyone on in the country paying some taxes.
Here is an article from ABC
How Paul Ryan's Tax Plan Measures Up For Americans - ABC News

Alissa_Sal's picture
Joined: 06/29/06
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"mom3girls" wrote:

I think that those that are in power, making decisions on their own tax rate, are "supposed" to be doing what is best for constituents not themselves. I do not believe that to be the truth, but I dont believe the choices they make are for themselves either. I think that 9 times out of 10 they make choices based on what they think will get them re-elected. Even if we put people from the middle class in office it would probably be the same. I am not sure what the answer to this issue is, term limits may or may not help.

I agree with this, but I think that the problem with it is "what will get them re-elected" seems to be "what will make the lobbyists give them enough campaign donations to get reelected. Which is typically lowering the tax rate for the richest people....

Alissa_Sal's picture
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Your article didn't say that they are going to tax capital gains though. It said:

Most of Romney's income is comprised of interest income, capital gains and dividends, which are not taxed under the plan Ryan first introduced in 2010.

Ryan proposed two tax rates, 10 and 25 percent, instead of the current six.

It doesn't mention that has changed since 2010. I'm just trying to understand, but I think the deal is that since the rich often make a ton of money through investments, if they were taxed a flat rate of 25% not including capital gains and the like, and we were taxed a flat rate of 10% but get rid of the deductions we usually get to claim, the rich would save tons, and we would pay more, which is also the only way to make this plan revenue neutral (which Ryan says it is.)

GloriaInTX's picture
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"Alissa_Sal" wrote:

It doesn't mention that has changed since 2010. I'm just trying to understand, but I think the deal is that since the rich often make a ton of money through investments, if they were taxed a flat rate of 25% not including capital gains and the like, and we were taxed a flat rate of 10% but get rid of the deductions we usually get to claim, the rich would save tons, and we would pay more, which is also the only way to make this plan revenue neutral (which Ryan says it is.)

There are many reasons that Capital Gains taxes are treated differently than income taxes. They way it is now they are actually taxed twice.

Another strange feature of the tax is that individuals are permitted to deduct only a portion of the capital losses they incur, whereas they must pay taxes on all of the gains. When taxpayers undertake risky investments, the government taxes fully any gain they realize if the investment has a positive return. But the government allows only partial tax deduction (of up to three thousand dollars per year) if the venture results in a loss. That introduces a bias in the tax code against risk-taking.5

One other peculiar aspect of the capital gains tax has made many economists conclude that it is economically inefficient: it is a form of double taxation on capital formation. Economists Victor Canto and Harvey Hirschorn explained:

A government can choose to tax either the value of an asset or its yield, but it should not tax both. Capital gains are literally the appreciation in the value of an existing asset. Any appreciation reflects merely an increase in the after-tax rate of return on the asset. The taxes implicit in the asset’s after-tax earnings are already fully reflected in the asset’s price or change in price. Any additional tax is strictly double taxation.6

Take, for example, the capital gains tax paid on a pharmaceutical stock. The value of that stock equals the discounted present value of all of the company’s future proceeds. If the company is expected to earn $100,000 a year for the next twenty years, the sales price of the stock will reflect those returns. The “gain” the seller realizes from the sale of the stock will reflect those future returns, and thus the seller will pay capital gains tax on the future stream of income. But the company’s future $100,000 annual returns will also be taxed when they are earned. So the $100,000 in profits is taxed twice—when the owners sell their shares of stock and when the company actually earns the income. That is why many tax analysts argue that the most equitable rate of tax on capital gains is zero.

Capital Gains Taxes: The Concise Encyclopedia of Economics | Library of Economics and Liberty

ClairesMommy's picture
Joined: 08/15/06
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Hey Canadian girls....Is anyone fearful of what may happen if/when Harper and this twit Romney have a tete-a-tete? Good grief. I'll be moving to Australia and watching North America implode from a distance.

Sorry US girls. I had to say something. I don't know much about your VP candidates' platforms. Romney does hit our news headlines every so often. Usually when he's gone and said something really stupid.

GloriaInTX's picture
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"Claire'sMommy" wrote:

Hey Canadian girls....Is anyone fearful of what may happen if/when Harper and this twit Romney have a tete-a-tete? Good grief. I'll be moving to Australia and watching North America implode from a distance.

Sorry US girls. I had to say something. I don't know much about your VP candidates' platforms. Romney does hit our news headlines every so often. Usually when he's gone and said something really stupid.

Like this:

At a campaign rally in Danville, Va., Biden quoted Romney as saying that "in the first hundred days he's going to let the big banks once again write their own rules -- unchain Wall Street.

"They're going to put y'all back in chains," Biden added, presumably referring to Romney and new running mate Paul Ryan.

Oops oh right, that was Biden.

ClairesMommy's picture
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"GloriaInTX" wrote:

Like this:

Oops oh right, that was Biden.

Are you saying Biden's an idiot too? Wow. I'd hate to make that choice on election day.

Joined: 04/12/03
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"GloriaInTX" wrote:

Like this:

At a campaign rally in Danville, Va., Biden quoted Romney as saying that Romney says "he wants to unchain the banks during his first 100 days in office

"They're going to put y'all back in chains," Biden added, presumably referring to Romney and new running mate Paul Ryan.

Oops oh right, that was Biden.

I'm not defending Biden as a politician but as a person. This is not the first time people take offense to something that was misunderstood and not meant to be offensive at all.

John Kerry, John McCain, Michele Bachmann, and Mitt Romney have used the term "tar baby" to describe a sticky situation. I assume none of them intended it to be offensive.

The phrase "pot calling the kettle black" has been taken as offense. Believe or not, "black-out BINGO" can be taken as offensive even though it literally means using your little black stamp to stamp every square on your BINGO card.

Spacers's picture
Joined: 12/29/03
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Has anyone tried this website? https://www.politify.com/

You can type in your current income, marital status, how many kids, etc. and it will show you each candidate's impact on your income would be if all of their proposed tax & financial policies went into effect for 2015. You can also see how your local area and even the country would be impacted financially.

wlillie's picture
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That is a beyond ridiculous website into the point of terrifying in the overall stupidity to even create something that is so obviously untrue. And I don't even like Romney. Wink

Alissa_Sal's picture
Joined: 06/29/06
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I'm still unsure about capital gains not being taxed, although I admit that I am in a little over my head in that conversation because I don't know very much about why they are taxed exactly the way they are.

Why is the website stupid and untrue? Unless I'm doing something wrong, it says we'll actually benefit under both plans.

wlillie's picture
Joined: 09/17/07
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"Alissa_Sal" wrote:

I'm still unsure about capital gains not being taxed, although I admit that I am in a little over my head in that conversation because I don't know very much about why they are taxed exactly the way they are.

Why is the website stupid and untrue? Unless I'm doing something wrong, it says we'll actually benefit under both plans.

If you do the whole map, there are like 5 red spots for Romney where areas benefit and the rest of the US is blue for benefiting from President Obama.

https://www.politify.com/election/local#4.00/32.82/-92.64

Spacers's picture
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"wlillie" wrote:

That is a beyond ridiculous website into the point of terrifying in the overall stupidity to even create something that is so obviously untrue. And I don't even like Romney. Wink

Nice try. Here's the *real* truth about this very truthful website...

How it Works

Politify provides personalized non-partisan forecasts of how political scenarios impact you, your community and your country.

Direct from the Source

Politify bases its forecasts on the candidate’s official policy platforms, as listed on their web site.
Learn more by visiting BarackObama.com and MittRomney.com.

Advanced Economic Modeling

Using family structure records and financial data, Politify models the US economy to simulate the impacts of political policies on American households.
We combine our analysis with reports from respected, non-partisan thinktanks.

https://www.politify.com/how-it-works

"wlillie" wrote:

If you do the whole map, there are like 5 red spots for Romney where areas benefit and the rest of the US is blue for benefiting from President Obama.

https://www.politify.com/election/local#4.00/32.82/-92.64

Maybe that's because most of the country *would* be better under Obama. Have you entered your own information? What was the result? Mine says I'd be $6580 richer under Obama's plan and $5240 richer under Romney's plan. But even more important to me, Obama's proposals would lower the national defecit by $273 Billion while Romney's would increase it by $566 Billion.

wlillie's picture
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I don't care enough to argue about it, but I'd like to point out that is NOW. I'd rather deal with this mess and get the **** over with so my kids aren't paying for our stupid mistakes. Sick to death of the money flowing out of DC like we have a hidden cache of gold, antiques or heirlooms to sell. We don't. Our kids will be paying the debt. Ridiculous. And I don't know how to say this nicely, but if you think President Obama is doing anything to lower the deficit, then I don't really care what your opinion is because it's obvious you've been drinking the koolaid.

Joined: 03/14/09
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You'd think that pulling troops out of the most expensive clusterfuck the US has ever participated in would be rewarded by conservatives. That was a good financial move on behalf of President Obama.

wlillie's picture
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It wasn't made because of finances. It was made to pacify liberals because he hasn't fixed GB.

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"wlillie" wrote:

It wasn't made because of finances. It was made to pacify liberals because he hasn't fixed GB.

I have no idea what GB is, but of course it was partly because of finances (and also because it was wrong). That war ensured the government hemorrhaged money. Obama couldn't really do anything until he had a plan to get out of Bush's mess. But he did, and saved money and lives in the process.

wlillie's picture
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guantanamo bay. If it was because of finances his campaign would focus on the poor state of the economy and his plans to fix it instead of other people's taxes. Wink

Alissa_Sal's picture
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So even when he does something that cuts the budget, it doesn't count because that couldn't have played any part in his motivation? Blum 3Biggrin

mom3girls's picture
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"Alissa_Sal" wrote:

So even when he does something that cuts the budget, it doesn't count because that couldn't have played any part in his motivation? Blum 3Biggrin

I think his spending spree over the last 3 1/2 years shows where is motivation is.

Alissa_Sal's picture
Joined: 06/29/06
Posts: 6427

Interesting article about Obama's "spending spree".

Conclusion (read the article for methodology, explanations, and charts):

So what does all of this mean? Did the Obama spending binge really happen? Was Nutting right? What it boils down to is your interpretation of the results. There is no denying that Obama has spent more than any other president in U.S. history. That is a fact, but that also holds true for every president since Herbert Hoover.

What is interesting, and honestly surprised me, is that President Obama has increased the amount of government spending by a lower percentage than any previous president since Hoover when adjusted for inflation. Does that mean Nutting was right? Does that mean the Obama spending binge didn't really happen? I'll leave that up to you.

GloriaInTX's picture
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"Alissa_Sal" wrote:

So even when he does something that cuts the budget, it doesn't count because that couldn't have played any part in his motivation? Blum 3Biggrin

What budget? Obama has never passed a budget. Including this year even though Democrats control the Senate.

Obama budget defeated 99-0 in Senate - Washington Times

Spacers's picture
Joined: 12/29/03
Posts: 4100

"wlillie" wrote:

I don't care enough to argue about it, but I'd like to point out that is NOW. I'd rather deal with this mess and get the **** over with so my kids aren't paying for our stupid mistakes. Sick to death of the money flowing out of DC like we have a hidden cache of gold, antiques or heirlooms to sell. We don't. Our kids will be paying the debt. Ridiculous. And I don't know how to say this nicely, but if you think President Obama is doing anything to lower the deficit, then I don't really care what your opinion is because it's obvious you've been drinking the koolaid.

You're right, our kids will be paying this debt, which is exactly why I want to see our national debt lowered. That $839 BILLION difference between the two candidates' proposals is going to go a very long way in the RIGHT direction. Even if Obama doesn't get all of his pie-in-the-sky dreams fulfilled, it's still the right direction. And if Romney doesn't get all of his, it's still the wrong direction.

Alissa_Sal's picture
Joined: 06/29/06
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"GloriaInTX" wrote:

What budget? Obama has never passed a budget. Including this year even though Democrats control the Senate.

Obama budget defeated 99-0 in Senate - Washington Times

Okay, cuts spending if you like that terminology better. Smile

wlillie's picture
Joined: 09/17/07
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"Spacers" wrote:

You're right, our kids will be paying this debt, which is exactly why I want to see our national debt lowered. That $839 BILLION difference between the two candidates' proposals is going to go a very long way in the RIGHT direction. Even if Obama doesn't get all of his pie-in-the-sky dreams fulfilled, it's still the right direction. And if Romney doesn't get all of his, it's still the wrong direction.

If you think the new healthcare bill isn't going to cost us at least 839 Billion dollars, then good for you. I'd love to live in your world. Again, I'm a Ron Paul girl and not a fan of Romney but if you have to choose between bad or worse, you deal with the bad and pray he comes to the realization that spending needs to be cut. Because you know the worse won't stop until he's out of office.