Monday, August 20, 2012

The Only Assumption You Should Make About Budget Promises

Although it's basic gist - that Ryan's budget is drivel that serves the wealthy at the expense of everybody else - is correct, Daily Finance gets this dead wrong:
Ryan's plan streamlines the tax code, condensing the current six tax brackets into just two: 10% and 25%. The plan doesn't specify where the cutoff line between the two brackets would lie, but it seems reasonable to expect that it would stay somewhere near where the 25% bracket currently hits in, at $70,700 for a married couple filing jointly.

If that was the case, and if the standard deduction stayed the same, the average household would see an immediate drop in its base tax rate. A couple filing jointly would pay $3,810 -- a savings of $1,035 when compared to their base tax rate under the current code. While not the stunning $265,000 that the average millionaire household would save under the Ryan plan, it is nonetheless a nice chunk of change.
No, it does not seem reasonable to expect that a married couple earning $70,700 or more would get a tax cut amounting to a "nice chunk of change".

Even if we ignore what that couple might be losing in government services in exchange for a $1,035 tax cut, a "chunk of change" those in Romney's stratospheric income bracket might mistake for pocket lint, there's absolutely no reason to believe that the tax cut would be delivered. Why not? Because Ryan and Romney have not specified a cut-off point, such that the only thing that's "safe to say" is that they know the math doesn't work and thus that they have no intention to deliver the inferred-but-not-promised tax cut.

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