Howard Gleckman of the Tax Policy Center writes:
What exactly is the tax plan? The budget sets only two targets: The federal government should raise no more than 19 percent of Gross Domestic Product in taxes and other revenues. And the top tax rate for both individuals and corporations should be 25 percent. Beyond that, it is a black box. The fiscal plan says nothing about payroll taxes or estate taxes, and almost nothing about taxes on capital gains and dividends. It calls for repealing or scaling back tax preferences, but does not say which ones or by how much. Watch how the House Ways & Means Committee fills in these extremely controversial blanks.
We do have one model for getting there, namely the “Zero Plan” from the Bowles-Simpson chairmen’s mark:
The Tax Policy center has analyzed the distributional effects of three variants of the Zero Plan:
(1) Eliminate all tax expenditures—for both income and payroll taxes—except the EITC, the child credit, foreign tax credits, and a few less common preferences.
(2) Eliminate tax expenditures only for income taxes, not for payroll taxes.
(3) Eliminate tax expenditures only for income taxes—not for payroll taxes—but cap and restructure the tax benefits for mortgage interest, employer-sponsored health insurance, and retirement saving instead of eliminating them.
It’s easy to see why Rep. Ryan didn’t settle on gory details — he’s planning on getting rid of the mortgage interest deduction! — but I do hope he’s serious about axing tax expenditures. Something like variant (3) might even be politically salable.