GOP tax bill gives breaks to most Americans, but wealthy get the biggest cut

House Republicans’ tax bill would increase taxes for 12 percent of Americans next year, according to a new report from the nonpartisan Tax Policy Center. By 2027, at least 28 percent of Americans would see their taxes rise, the report says. Many of those taking a hit would be people who make less than $48,000 a year.

The vast majority of Americans would get a tax cut if the bill becomes law, TPC found, but the rich would benefit the most. The finding comes amid intense debate over whether this bill does enough to help the middle and working classes, a key promise of President Trump.

The middle of the middle — those making $48,000 to $86,000 — would get an average tax cut of $700 next year, according to TPC. Meanwhile, taxpayers in the top 1 percent (those making more than $730,000) would receive an average cut of $37,000 next year, and the top 0.01 percent (those making more than $3.4 million) would see their after-tax incomes rise by an average of $179,000 in 2018.

“The largest cuts in terms of dollars and as a percentage of after-tax income would accrue to the higher-income households,” TPC wrote.

Since the wealthy pay more in taxes, some Republicans have argued it makes sense for them to get a bigger tax cut. But TPC also looked at the percent change in after-tax income for the poor, middle class and rich. Using that metric makes it easier to compare across the income groups. According to TPC, the middle class would get a 1.2 percent boost to their after-tax income, while taxpayers in the top 1 percent would get a 2.5 percent boost. The bottom 40 percent would get almost no benefit, with taxes for that group actually increasing $10 to $20, on average, by 2027.

TPC’s findings echo what the non-partisan Joint Committee on Taxation — the official congressional body that analyzes tax bills — found: That some in the middle class would see a tax increase under the bill.

The House is aiming to pass this bill by Thanksgiving. House Speaker Paul Ryan (R-Wis.) said Sunday that Republicans in his chamber are “on track” to make that happen.

“We have to have tax cuts for people in the middle. This delivers that, and we really are convinced this is going to help get our economy growing and reaching its potential,” Ryan said on Fox News Sunday.

Ryan often says that a middle income family of four making $59,000 a year would pay $1,182 less in taxes next year, but that amount decrease over time and would be a tax hike for the family by 2024, according to New York University tax professor David Kamin. A key new benefit aimed at helping the middle class — the Family Flexibility Credit — goes away after 2022 in the GOP bill. The credit is worth $300 per person or $600 per couple, making it an important tax deduction for the working and middle classes.

Republicans are currently debating whether they can extend the credit, but that would likely necessitate raising money on someone else or going further into debt (the bill already adds $1.5 trillion to the nation’s debt). Some in the GOP argue that a future Congress is highly unlikely to let that credit expire, but that is dependent on action by politicians down the road.

 

 

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