WASHINGTON — A new report from Senate Democrats on the Joint Economic Committee found that the House Republican tax-reform plan would reduce federal tax collections by $4.5 trillion over the next decade and cut taxes for the wealthiest Americans by establishing a new tax-bracket structure.

The four-page report released Wednesday outlined the impact of eliminating five popular tax deductions — mortgage interest, state and local taxes, charitable contributions, tax exclusions for employers, and contributions to 401(k) plans — as a way to offset the cost of lowering tax rates proposed by Republicans.

“This report will help change the debate and show that Republicans are far more concerned with lowering tax rates on the very wealthy than on reducing the deficit,” Sen. Chuck Schumer, D-N.Y., said on a conference call with reporters. “This report pulls up the skirts.”

The plan proposed by House Budget Committee chairman Paul Ryan, R-Wisc., would eliminate the top tax income bracket of 35% and replace it with two tax brackets, 25% and 10%. The new structure would be achieved by eliminating the alternative minimum tax and various tax deductions. Republicans have not identified which deductions or exemptions would face the ax, but they have not ruled out tax-exemption for municipal bonds.

The JEC report found that by eliminating just five tax deductions, households earning between $50,000 and $100,000 would see a tax hike of at least $1,358. Households with incomes between $100,000 and $200,000, would pay an additional $2,700 annually while those earning more than $1 million annually would see a net tax break of around $300,000.

“In order to get to those tax rates, you have to go after not only tax preferences that benefit the wealthy but also the middle class,” said Bill Daly, director of government affairs at the National Association of Bond Lawyers. “That means that any tax preference that is perceived as benefiting the wealthy is going to be under great pressure and the muni tax-exemption falls in there.”

Daly said dropping the state and local tax deduction and mortgage interest deduction would both have a negative impact on municipalities, further straining their tax collections and affecting credit quality.

Roberton Williams, senior fellow at the Tax Policy Center, said the numbers in the JEC report were “cobbled together” but the bottom line in the analysis is correct: the middle class will get hit and the rich will see tax cuts. “To go after the rich you have to go after the things that benefit them,  such as tax preferences for investments —capital gains, dividends, and tax-exemption on municipal bonds,” he said.

The Ryan plan loses tax revenue up front by reducing rates, so in order to recoup the loss lawmakers will have to look much further in the tax code — and that may include going after muni bonds, Williams said.

Republicans were quick to dismiss the report. “This partisan attack doesn’t even pass the laugh test,” said Sage Eastman, senior adviser to the House Ways and Means Committee chairman Rep. Dave Camp, R-Mich., who is spearheading the GOP tax reform effort. ”They made a host of bogus assumptions to levy a partisan attack on tax reform. The American people want a flatter, simpler tax code that eliminates special interest loopholes in order to lower tax rates and make the code fairer.”

Meanwhile, Wells Fargo released a report Wednesday that said fiscal policy uncertainty will continue to build around the upcoming “fiscal cliff,” and their economists are already seeing the “first signs that growth has begun to soften in response to that uncertainty.”

The so-called fiscal cliff includes the expiration of the 2001 and 2003 Bush tax cuts, sequestration, expiration of the payroll tax cut and a handful of other expiring tax provisions set to take place beginning in January 2013.

There are many scenarios that could develop, but Wells Fargo said the most likely outcome would be for policymakers to convene after the November elections and pass a continuation of existing tax policy and federal government spending levels.

That option would place a drag on economic growth and weigh on financial markets leading up to a deal likely sometime in December. It would be better than the worst-case scenario, which would result in a recession beginning in mid-2013, according to Wells Fargo.

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