Ryan is expected to unveil a major tax overhaul bill later this week.
The Republican lawmaker who will soon be running for president is planning a $1 trillion tax overhaul, but he will also offer an even bigger cut to corporations and the wealthy.
The plan unveiled Thursday by the Wisconsin Republican will offer corporations the biggest tax cut in decades, but it’s also likely to leave the wealthy with bigger tax bills.
That’s because the plan is based on a $700 billion plan by Ryan and his Republican allies that’s estimated to cut the top corporate tax rate from 35% to 21%.
That rate was cut by 20% under President Donald Trump, but the plan could be even larger.
The tax cuts would not be retroactive.
They’re only going to take effect once they expire, and if they’re not paid for they’re going to expire even sooner, said Chris Wark, a senior fellow at the Tax Policy Center.
Wark said that’s a big deal.
“They could theoretically pay it back in 20 years, and it’s going to cost you a fortune in lost revenue, even with that, the rate cut doesn’t come for free,” Wark told Business Insider.
If the tax cuts are enacted, it would mean corporations will save about $3 trillion in taxes by 2026, according to a nonpartisan analysis of the bill released earlier this year.
And the plan would make corporations pay more, too.
That could mean more of the money going to the richest 1% of taxpayers, as the top 1% would see their taxes increase, according the analysis.
The top 1.1% of earners would see a tax cut of $2,037 per person, according a Congressional Budget Office report.
The middle class would see the largest tax cuts, getting a $6,726 cut.
The wealthy would get a $3,766 cut.
But that’s where things get complicated.
Wargent, a tax expert at the conservative American Enterprise Institute, said the bill will increase the burden on the middle class, because of the massive tax cuts that corporations will be able to claim, which is likely to be a lot more than $2 trillion.
That means the middle-class taxpayers are going to see their tax bills go up by more than 10%.
But that isn’t the entire cost.
Warsk said the middle is going to pay the biggest share of the cost of the tax plan, as it would end up being responsible for more of its $1.5trillion, which would mean the middle would end out to be paying about 60% of the total tax bill.
But the wealthy would pay about 60%, because they would be able keep more of their money.
“That’s where we are with the tax code right now,” Wargents report said.
“It’s very difficult to figure out exactly what the tax bill is going a very, very big slice of the pie that the rich are going, and the middle income earners are going,” Warski said.
The new plan would give corporations an additional $2 billion, while eliminating some deductions and making the corporate tax code more progressive.
That might not be enough to offset the enormous tax cuts corporate profits will receive, Wargens report said, but Warges analysis found that eliminating a lot of deductions and some taxes is not going to be enough.
“The tax reform is a massive tax cut for corporations, not just the rich, but also for the middle and low-income families, which are the backbone of the American economy,” Wargo said.
But Wargen said it’s important to remember that corporate profits are a big part of the U.S. economy.
“For them to really be able do anything with their profits, it’s really going to have to come from something else,” Warge said.
Warge also said that corporations won’t get all of the benefits of the plan, because it’s based on regressive tax cuts.
The proposal also will end the Earned Income Tax Credit, which gives working- and middle-income people an additional tax break.
“This is a big win for the rich,” Wague said.
There’s also a tax break for high-income taxpayers, though it’s not as much as Wargan thinks.
The bill also does not include a tax increase on the wealthy, which Warga said is “pretty small.”
The plan also does make some changes to corporate taxes, but those are unlikely to be very significant.
That tax cut could mean the corporations are not going bankrupt anytime soon, according Wargans report.
And there is one small change that could be a big winner for businesses.
Wargo found that the plan includes a new $200 billion item that he called the “pipeline infrastructure bill,” which is meant to build roads, ports, airports, and other infrastructure projects across the country.
The highway bill would be