Ilya Marritz covers business for WNYC.
Paul Ryan, Wall Street and Taxes
Tuesday, August 14, 2012
If there's one thing the new Republican candidate for vice president, Paul Ryan, adds to this November’s election, it's a strong contrast with Democrats on the issues of wealth and taxation. With an unusually large number of both very rich and very poor people, it's a choice that will affect the pocketbooks of many New Yorkers.
In 2008, a majority of voters making over $250,000 a year chose Barack Obama for president – even though he said he’d raise their taxes. In 2012, the Obama campaign’s message is that the policies of the Romney-Ryan ticket favor the rich over the poor.
That’s correct: Romney and Ryan support tax cuts for top earners because they believe it’s the best way to create economic growth. And plans Ryan has offered in the past, such as his “Roadmap for America’s Future” would eliminate tax breaks that benefit the poor, like the Earned Income Tax Credit and the Childcare Tax Credit. (Romney hasn’t specified what tax breaks would end under his watch, but analysts say to make the math work, he’d have to gut many of the benefits poorer Americans now enjoy.)
Now that he is a candidate for vice president, Ryan says he supports the Romney campaign’s proposals.
Where the Romney-Ryan team’s tax plans get really interesting is when we turn to middle-income earners, specifically the upper-middle class.
A dollar does not go as far in New York as other places, and a million dollar apartment in Manhattan might be a fairly modest one-bedroom. But even if homes are small, they are expensive, and that means many New Yorkers may carry big mortgages. They also enjoy unusually large tax write-offs through the mortgage interest deduction, a perk that Ryan has said should be ended. (Romney has not said where he stands on the issue.)
Roberton Williams, with the nonpartisan Tax Policy Center, pointed out that the same principle applies when it comes to itemized deductions. New York is a high-tax state and people with large incomes pay a lot in state and local taxes, which are then listed as an itemized deduction in their federal tax returns. It’s a tax deduction that would disappear under Ryan's earlier proposals, and might disappear under Romney.
So while Romney and Ryan would cut top tax rates, they'd also eliminate some popular benefits.
“It’s hard to guesstimate ahead of time exactly how people would fare” Williams said.
An informal survey of finance professionals in the area around Zuccotti Park showed a divide on how the Ryan pick affects the election.
“His conservative values are not in line with my own and his financial policy will only destroy the middle class in this country” said John Borusso, an energy analyst.
Others, who did not agree to give their names, expressed support for Romney and Ryan, motivated mainly by anger at the president, who is seen by some as a spendthrift with little regard for the realities of running a business. (Many employers in the financial industry do not allow their employees to talk with the press, and few were willing to speak on the record.)
The Romney team can take some comfort in the fact that most finance professionals seemed well aware of Ryan and his ideas. One man said he’s long been aware of Ryan because conservative CNBC host Larry Kudlow talks about the Wisconsin congressman on his show frequently.
But while Wall Streeters are aware of Ryan, he does not seem to arouse passions. One technology specialist at a major bank recalled there was much greater interest when Sarah Palin became the VP candidate four years ago.