Trump, Ryan dif­fer on mid­dle-class tax cuts

Pres­i­dent fa­vors a larger re­duc­tion than speaker’s plan.

Austin American-Statesman - - MORE OF TODAY’S TOP NEWS - By Max Ehrenfreund Wash­ing­ton Post

Pres­i­dent Don­ald Trump and House Speaker Paul Ryan both want to re-write the tax code, but their pro­pos­als dif­fer on how much tax re­lief to give the mid­dle class.

Trump wants a tax cut across the board, ac­cord­ing to the plan he pub­lished dur­ing the cam­paign. He has pro­posed re­lief for the wealthy es­pe­cially, but also for less af­flu­ent house­holds. The plan that Ryan, R-Wis., and his col­leagues in the House have put for­ward would not sub­stan­tially re­duce taxes for the mid­dle class, and many house­holds would pay more in the up­per mid­dle class.

Trump’s plan would be ex­tremely costly for the gov­ern­ment, and the pres­i­dent’s past com­ments sug­gest he would be will­ing to put the fed­eral gov­ern­ment deeper into debt to fund breaks for the mid­dle class.

Ryan’s plan would sim­plify and stream­line the tax code in ac­cor­dance with con­ser­va­tive or­tho­doxy, elim­i­nat­ing good­ies for house­holds with mod­est in­comes that Trump would pre­serve or ex­pand.

In all, tax­pay­ers with roughly av­er­age in­comes could ex­pect a tax cut of around $1,100 a year un­der Trump’s plan, com­pared with just $60 un­der Ryan’s plan once the pro­pos­als were fully im­ple­mented.

Now, af­ter even a united Trump-Ryan ef­fort on health care failed to win over enough Repub­li­cans to get through the house, their hopes of pass­ing a tax plan de­pend on get­ting on the same page quickly.

Dur­ing the cam­paign, Trump pro­posed a plan that would have re­duced taxes dras­ti­cally, es­pe­cially for the wealthy but also for the poor and work­ing class.

Af­ter a decade, 99.6 per­cent of the tax re­lief Ryan pro­posed would have ac­crued to the wealth­i­est 1 per­cent of the coun­try. In Trump’s plan, 50.8 per­cent of the re­lief would have gone to that group, ac­cord­ing to analy­ses by the non­par­ti­san Tax Pol­icy Cen­ter.

In terms of taxes on the rich, both plans would re­duce the mar­ginal rate paid by the wealth­i­est tax­pay­ers on in­di­vid­ual in­come from 39.6 per­cent to 33 per­cent.

And among those in the poor­est fifth of house­holds, the typ­i­cal tax­payer would save about $100 un­der Ryan’s plan and about $120 un­der Trump’s.

The two plans would re­peal some of the taxes that Oba­macare im­posed on the rich, and both plans also re­peal the es­tate tax, which rich fam­i­lies pay when one of their mem­bers dies. Re­peal­ing the tax would re­turn $300 bil­lion or so to those fam­i­lies over a decade, ac­cord­ing to the cen­ter, depend­ing on the de­tails of the plan.

Mean­while, both plans would in­crease the amount that many fam­i­lies can earn with­out pay­ing taxes — to $30,000 for a mar­ried cou­ple in Trump’s plan and $24,000 in the pro­posal from Repub­li­cans in the House.

In Trump’s plan, par­ents would be al­lowed to deduct child care ex­penses from their in­come. Ryan’s plan would pre­vent tax­pay­ers from mak­ing de­duc­tions from their in­come — ex­cept for in­ter­est on their homes and do­na­tions.

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