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Ryan’s Tax Plan Moves the Ball

4:08 PM, Mar 21, 2012 • By IKE BRANNON
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While the spending side of the House Republican budget plan is getting most of the media attention, the revenue portion of the plan deserves just as much attention for what it achieves—the resumption of a healthy debate over just what tax reform should entail.

Paul Ryan

The broad strokes of what major tax reform would entail are becoming clear, and the Ryan tax plan is a manifestation—and advancement—of that consensus. Lower, flatter rates on both individuals and businesses, a virtual elimination of deductions, and a commitment to arrive at a level of revenue that’s sufficient to fund the government we have are things that honest people in both parties can agree would drastically improve the mess of a tax code currently in place.

Democrats and Republicans may quibble over exactly what that the size of the government ought to be—and what the rates and thresholds should be as a consequence—but few would object to a tax system along the lines of what the House Budget Committee proposed. The fact that the plan does not specify the exact thresholds (and is not strident about the precise rates) gives the plan a modicum of flexibility that allows people whose visions of the size of government differ to still coalesce around the broad confines of the plan. And there is some sign that this is occurring, despite the predictable objections that greeted the plan’s release from the left.

Not everyone wants to acknowledge that this plan represents any consensus—and some say the House Budget Committee’s tax plan would not raise nearly enough revenue to fund the spending laid out in the plan. However, that calculus is predicated upon the economy sliding into a near recession in 2013, per the CBO’s baseline, which by law must hew to current law and include the expiration of the Bush tax cuts. The Ryan plan would most emphatically not place such growth constraints on the economy: The CBO scored the Bowles-Simpson plan—which is markedly similar to the Ryan plan—as generating tax revenue equal to twenty percent of GDP, well in excess of what Ryan’s tax plan would need to produce a balanced budget.

The contrast could not be clearer. The House Budget Committee’s tax plan is an attempt to continue an honest conversation about tax reform. The administration’s framework was an attempt to squelch all discussion of such a conversation to allow the president to run for reelection against a do-nothing Congress. 

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