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Fabricated Details on Tax Reform

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Unread 06.26.12, 11:34 AM
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Fabricated Details on Tax Reform

On 06.26.12 05:58 AM posted by Curtis Dubay

The Tax Policy Center (TPC) and the Democratic staff of the Joint Economic Committee (JEC) fabricated details about the tax reform outline passed by the House of Representatives as part of Budget Committee chairman Paul Ryanís (RĖWI) budget. Their ďanalysisĒ rests on thin air.

The Ryan budget provides a tax reform outlineónothing more. Itís a guidepost for a future tax reform plan. It provides few details beyond a top tax rate of 25 percent and the desire to eliminate some deductions and credits. The details are to be filled in later by the Ways and Means Committee when the time is right to advance tax reform.

Undeterred by the lack of details necessary to do a legitimate economic analysis, the Democratic staff of the JEC, using data from TPC, recently released a report claiming that the outline would be a big tax cut for the rich financed by raising taxes on the middle class.

The details that would allow the JEC or TPC to draw this conclusion simply do not exist. They had to make all sorts of assumptions about intricate details in the tax reform outline provided in the Ryan budget.

For instance, JEC Democrats and TPC assume that the Ryan plan would eliminate deductions for state and local taxes, mortgage interest and charitable contributions, the employer-provided health insurance exclusion, and tax 401(k) contributions.

Where did they come up with all that? They conjured it out of thin air.

The whole premise of their argumentóthat the Ryan plan is a tax cutóis faulty as well. As Americans for Tax Reform explains, JEC and TPC assume that the revenue basis for the tax reform outline is what the current code would raise if the Bush tax cuts, and all the other Taxmageddon tax increases, occur. This would push revenue to historic new heights.

The Ryan plan makes the much more reasonable assumption that revenue will remain at historical averages. JEC and TPCís flawed revenue assumption makes the Ryan outline look like an enormous tax cut when it isnít a tax cut at all.

The Washington Post, in an article by Lori Montgomery, reported the imagined elimination of deductions and credits, and revenue falsehood, as fact. Not so.

The economy badly needs tax reform, because the current code is from a bygone era. It strangles economic growth and keeps us from reaching our productive capacity. The blatant misrepresentations of the Ryan tax outline are just that. We should get past such distortions of plans meant to propel tax reform forward. If we donít, tax reform will remain stuck in neutral.

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