GOP Budget Proposal Once Again Punts Tough Questions


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Once again, U.S. House leadership has released a budget blueprint that promises a “stronger America,” but is, at best, vague about the hard choices lawmakers really must make to ensure the nation has enough resources to meet its basic priorities.

After releasing A Balanced Budget for a Strong America Tuesday, House Budget Committee Chair Tom Price asserted that the budget blueprint “balances the budget within ten years.” But like so many Republican budget proposals before it, the plan would achieve balance almost entirely through spending cuts. The outcome of budget battles in both Republican and Democratic administrations demonstrates balanced budgets are never achieved solely through spending cuts.

On the tax side, the House budget plan appears to have been sketched out on a cocktail napkin. Apart from enacting two new tax cuts that would overwhelmingly benefit the wealthy—and implicitly hiking taxes on low-income families by cutting two targeted tax credits for working families--the House plan is vague about how it would approach urgent reforms of individual and corporate tax laws.

Last year, we criticized the House Budget proposal for being very specific about how low it would cut  top tax rates, while offering no details about which loopholes it would close to pay for these rate cuts. It didn’t seem possible, but this year’s proposal offers even fewer details. On the important question of how to restructure the income tax, the blueprint says only that it would “lower rates… [and broaden] the tax base by closing special interest loopholes that distort economic activity.” This may be an appropriate talking point for a political candidate, but the budget plan should offer something more than campaign rhetoric.

And while the plan is mostly devoid of comprehensive tax reform proposals, it offers copious details on two proposed tax cuts that would disproportionately benefit the wealthy. The plan would repeal Medicare tax expansions designed to help fund healthcare reform, and it would repeal the Alternative Minimum Tax (AMT). The Medicare tax repeal would blow a $1 trillion hole in the federal budget over the next decade, and dismantling the AMT would lose more than $300 billion over the same period. 

More worrisome is that the House budget also appears to endorse a backdoor tax increase on low-income working families by allowing temporary expansions of the federal Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) to expire. The tables in the House blueprint show no change in revenues from a current-law baseline, implying that these temporary changes will be allowed to expire on schedule at the end of 2017. Allowing these provisions to expire would essentially be a tax hike on more than 13 million working families.

This should be no surprise to observers of the legislative process, since the Republican leadership in the House has repeatedly signaled its intention to let these valuable anti-poverty strategies expire. But in combination with the two high-end tax cuts, the net impact of these changes would be to make the federal tax system less fair.

It’s not easy to design a fiscal blueprint that avoids the hard tax reform questions facing the nation while simultaneously hiking taxes on low-income families and cutting them for the best-off, but the House Budget blueprint appears to have accomplished this.

Thank you for visiting Tax Justice Blog. CTJ and ITEP staff will soon retire this domain. But ITEP staff are still blogging! You can find the same level of insight and analysis and select Tax Justice Blog archives at our new blog, http://www.justtaxesblog.org/

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