SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
This week, without a single hearing, the House of Representatives is expected to vote on the "Tax Cuts and Jobs Act." After weeks of claiming that all middle-class taxpayers would see a tax cut, Senate Majority Leader Mitch McConnell (R-KY) took the rare step of admitting to a lie over the weekend, telling The New York Times, "You can't guarantee that absolutely no one sees a tax increase." And on Friday, House Speaker Paul Ryan (R-WI) also sought to walk back his claims, from promising tax cuts to "everyone" to assuring "average" taxpayers that they would see a cut. Now, new analysis shows just how many middle- and working-class Americans would see a tax increase under their tax plan.
According to analysis by the Center for American Progress based on Tax Policy Center data, 36 million working- and middle-class households would see a tax increase by 2027 under the House tax bill. Based on the latest version of the tax plan, 22.5 percent of tax units (tax parlance for households) in the bottom 80 percent of the income scale would see their taxes go up by 2027, at an average cost of a whopping $1,130 per family with a tax increase. With more than 159 million households in these income brackets, 36 million would end up facing a tax increase.
Source: Tax Policy Center.
And what's most striking is just how many of the tax increases in the bill fall on middle class and struggling families. In fact, the middle and working class will comprise the overwhelming majority of those facing tax increases under the House bill (36 million out of 45 million households facing tax increases).
So, how does this happen? The short answer is that the House tax bill is so heavily tilted toward corporations and high-income taxpayers that they have to raise taxes on many middle-class families in order to pay for it. The largest tax cut, which would lower the corporate rate from 35 percent to 20 percent, would cost about $1.5 trillion over 10 years. There is also a new tax loophole for President Donald Trump himself--cutting the top rate on "pass-through" income from 39.6 percent to 25 percent. The bill eliminates the Alternative Minimum Tax, which also exclusively benefits households with incomes above $200,000. And it repeals the estate tax after 5 years, which is paid by the wealthiest 0.2 percent of estates and will cost about $240 billion over the next decade.
As Rebecca Vallas and I outlined last week, this is partially offset with a series of tax cuts on the working and middle class. Some of the hardest hit will be student loan recipients: Nearly 12 million will be affected by repeal of the student loan interest deduction. Graduate students will be hit even harder, since the House tax bill proposes taxing tuition paid by their universities, which will raise taxes by nearly $10,000 on some students.
The plan also eliminates the Work Opportunity Tax Credit--an incentive for businesses that hire disabled veterans and people who have been looking for work. And, perhaps most egregiously, the House bill ends tax benefits for people with high medical expenses. This would fall particularly hard on seniors in need of long-term care and families of Alzheimer's patients.
Importantly, the bill's "Family Flexibility Credit"--a provision in the bill that does benefit the middle class--would expire after 5 years, even though nearly every other tax cut (corporate tax cut, the Trump "pass-through" loophole, estate tax elimination, and the elimination of the alternative minimum tax) would continue indefinitely.
Paul Ryan and Mitch McConnell may want to tout the middle-class benefits of their tax bill, but if one thing is clear from the current tax legislation, it's this: It's a great deal for the wealthiest Americans and large corporations, and a lousy one for the middle and working class.
Alex Thornton, Seth Hanlon, and Alex Rowell all contributed analysis.
© 2023 TalkPoverty.org
This week, without a single hearing, the House of Representatives is expected to vote on the "Tax Cuts and Jobs Act." After weeks of claiming that all middle-class taxpayers would see a tax cut, Senate Majority Leader Mitch McConnell (R-KY) took the rare step of admitting to a lie over the weekend, telling The New York Times, "You can't guarantee that absolutely no one sees a tax increase." And on Friday, House Speaker Paul Ryan (R-WI) also sought to walk back his claims, from promising tax cuts to "everyone" to assuring "average" taxpayers that they would see a cut. Now, new analysis shows just how many middle- and working-class Americans would see a tax increase under their tax plan.
According to analysis by the Center for American Progress based on Tax Policy Center data, 36 million working- and middle-class households would see a tax increase by 2027 under the House tax bill. Based on the latest version of the tax plan, 22.5 percent of tax units (tax parlance for households) in the bottom 80 percent of the income scale would see their taxes go up by 2027, at an average cost of a whopping $1,130 per family with a tax increase. With more than 159 million households in these income brackets, 36 million would end up facing a tax increase.
Source: Tax Policy Center.
And what's most striking is just how many of the tax increases in the bill fall on middle class and struggling families. In fact, the middle and working class will comprise the overwhelming majority of those facing tax increases under the House bill (36 million out of 45 million households facing tax increases).
So, how does this happen? The short answer is that the House tax bill is so heavily tilted toward corporations and high-income taxpayers that they have to raise taxes on many middle-class families in order to pay for it. The largest tax cut, which would lower the corporate rate from 35 percent to 20 percent, would cost about $1.5 trillion over 10 years. There is also a new tax loophole for President Donald Trump himself--cutting the top rate on "pass-through" income from 39.6 percent to 25 percent. The bill eliminates the Alternative Minimum Tax, which also exclusively benefits households with incomes above $200,000. And it repeals the estate tax after 5 years, which is paid by the wealthiest 0.2 percent of estates and will cost about $240 billion over the next decade.
As Rebecca Vallas and I outlined last week, this is partially offset with a series of tax cuts on the working and middle class. Some of the hardest hit will be student loan recipients: Nearly 12 million will be affected by repeal of the student loan interest deduction. Graduate students will be hit even harder, since the House tax bill proposes taxing tuition paid by their universities, which will raise taxes by nearly $10,000 on some students.
The plan also eliminates the Work Opportunity Tax Credit--an incentive for businesses that hire disabled veterans and people who have been looking for work. And, perhaps most egregiously, the House bill ends tax benefits for people with high medical expenses. This would fall particularly hard on seniors in need of long-term care and families of Alzheimer's patients.
Importantly, the bill's "Family Flexibility Credit"--a provision in the bill that does benefit the middle class--would expire after 5 years, even though nearly every other tax cut (corporate tax cut, the Trump "pass-through" loophole, estate tax elimination, and the elimination of the alternative minimum tax) would continue indefinitely.
Paul Ryan and Mitch McConnell may want to tout the middle-class benefits of their tax bill, but if one thing is clear from the current tax legislation, it's this: It's a great deal for the wealthiest Americans and large corporations, and a lousy one for the middle and working class.
Alex Thornton, Seth Hanlon, and Alex Rowell all contributed analysis.
This week, without a single hearing, the House of Representatives is expected to vote on the "Tax Cuts and Jobs Act." After weeks of claiming that all middle-class taxpayers would see a tax cut, Senate Majority Leader Mitch McConnell (R-KY) took the rare step of admitting to a lie over the weekend, telling The New York Times, "You can't guarantee that absolutely no one sees a tax increase." And on Friday, House Speaker Paul Ryan (R-WI) also sought to walk back his claims, from promising tax cuts to "everyone" to assuring "average" taxpayers that they would see a cut. Now, new analysis shows just how many middle- and working-class Americans would see a tax increase under their tax plan.
According to analysis by the Center for American Progress based on Tax Policy Center data, 36 million working- and middle-class households would see a tax increase by 2027 under the House tax bill. Based on the latest version of the tax plan, 22.5 percent of tax units (tax parlance for households) in the bottom 80 percent of the income scale would see their taxes go up by 2027, at an average cost of a whopping $1,130 per family with a tax increase. With more than 159 million households in these income brackets, 36 million would end up facing a tax increase.
Source: Tax Policy Center.
And what's most striking is just how many of the tax increases in the bill fall on middle class and struggling families. In fact, the middle and working class will comprise the overwhelming majority of those facing tax increases under the House bill (36 million out of 45 million households facing tax increases).
So, how does this happen? The short answer is that the House tax bill is so heavily tilted toward corporations and high-income taxpayers that they have to raise taxes on many middle-class families in order to pay for it. The largest tax cut, which would lower the corporate rate from 35 percent to 20 percent, would cost about $1.5 trillion over 10 years. There is also a new tax loophole for President Donald Trump himself--cutting the top rate on "pass-through" income from 39.6 percent to 25 percent. The bill eliminates the Alternative Minimum Tax, which also exclusively benefits households with incomes above $200,000. And it repeals the estate tax after 5 years, which is paid by the wealthiest 0.2 percent of estates and will cost about $240 billion over the next decade.
As Rebecca Vallas and I outlined last week, this is partially offset with a series of tax cuts on the working and middle class. Some of the hardest hit will be student loan recipients: Nearly 12 million will be affected by repeal of the student loan interest deduction. Graduate students will be hit even harder, since the House tax bill proposes taxing tuition paid by their universities, which will raise taxes by nearly $10,000 on some students.
The plan also eliminates the Work Opportunity Tax Credit--an incentive for businesses that hire disabled veterans and people who have been looking for work. And, perhaps most egregiously, the House bill ends tax benefits for people with high medical expenses. This would fall particularly hard on seniors in need of long-term care and families of Alzheimer's patients.
Importantly, the bill's "Family Flexibility Credit"--a provision in the bill that does benefit the middle class--would expire after 5 years, even though nearly every other tax cut (corporate tax cut, the Trump "pass-through" loophole, estate tax elimination, and the elimination of the alternative minimum tax) would continue indefinitely.
Paul Ryan and Mitch McConnell may want to tout the middle-class benefits of their tax bill, but if one thing is clear from the current tax legislation, it's this: It's a great deal for the wealthiest Americans and large corporations, and a lousy one for the middle and working class.
Alex Thornton, Seth Hanlon, and Alex Rowell all contributed analysis.