Since House Speaker Paul Ryan signaled his support of Republican presidential candidate Donald Trump earlier this month, the pundit class has continually speculated whether Trump is “conservative enough” and how Trump’s policy agenda would align with the party’s standard bearers.
With last Friday’s release of Ryan’s blueprint for tax overhaul called “A Better Way”, it is apparent Ryan’s view of tax policy has much in common with the regressive, budget-busting plan Trump sketched out last fall — and in some ways is even more extreme.
The most obvious similarity between the two plans is their cost. At a time when the nation faces pressing budget shortfalls in both the short- and long-run, further reducing our already low tax receipts is a recipe for fiscal disaster. Yet both Ryan and Trump seem unconcerned by this. While the $4 trillion, 10-year estimated cost of Ryan’s tax cuts is dwarfed by the $12 trillion cost of Trump’s plan, any tax reform proposal with a price tag that includes the word “trillions” is exceedingly out of touch with the harsh fiscal realities facing the federal budget going forward.
Speaker Ryan and Trump also appear to have similar philosophies about who should be the biggest beneficiary of their tax largesse. Ryan’s proposal raises the stakes, taking Trump’s top-heavy approach to a new level. CTJ’s analysis finds that candidate Trump would give 37 percent of his tax cuts to the top 1 percent of Americans. Our analysis of Ryan’s plan finds it would reserve a staggering 60 percent of its tax breaks for this small privileged group. In fact, the top one-tenth of the top 1 percent would enjoy 35 percent of the Ryan tax cuts.
Candidate Trump and Speaker Ryan also appear to have similar views about corporate taxes. Trump’s plan would reduce the yield of the corporate tax by $2 trillion over the next decade. Ryan’s plan outdoes Trump’s, with an estimated price tag of $2.5 trillion over 10 years. To put this in context, the price tag of Ryan’s plan is more than half of what the corporate income tax is projected to bring in over the next 10 years. While both candidates would sharply reduce corporate tax rates, Ryan would make matters worse by moving to a territorial tax system that would allow multinational corporations to indefinitely continue the charade of pretending that a large share of their profits are earned in foreign tax havens. Both proposals to slash corporate tax collections come at a time when profitable Fortune 500 companies are paying only about half the current statutory tax rate, federal tax collections are at record low levels and U.S. corporate taxes as a share of the economy are substantially smaller than corporate tax collections in most other developed nations.
To be sure, there are differences between the approaches Ryan and Trump would take to cripple our revenue-raising capacity. But the two blueprints for tax change outlined by Ryan and Trump are notable both for their stark favoritism toward the rich and the yawning budget holes they would create for our nation in years to come.