Majority Would Benefit From Tax Bill, but Effects Peter Out, Study Says
More than 60% of taxpayers, including much of the middle class, would see lower taxes in 2019 under the House Republican tax plan while 8% would pay more, according to a new analysis released Tuesday.
But by 2027, many of those effects would peter out and nearly one in five households would pay more in taxes than if Congress had done nothing. By that point, fewer than half of households would have tax cuts exceeding $100, the study found.
The analysis was done by the nonpartisan Joint Committee on Taxation, the official estimator of tax legislation in Congress.
In 2019, among households making between $50,000 and $75,000, 65% would get tax cuts exceeding $500. In that same group, 6% would see taxes rise by at least $500.
Republicans are using the nonpartisan analyses to show that people at all income levels would benefit from the plan.
"We can help the typical family in our country, that family of four, five, six that is struggling," said Rep. Carlos Curbelo (R., Fla.).
But Democrats are using the same numbers to point out that some lower-income people would see their taxes rise and the money would in effect fund tax cuts for high-income households.
"The notion that it's basically for the middle class is untrue," said Rep. Sander Levin (D., Mich.).
Among middle-income households, the winners are generally those who would benefit from an expanded standard deduction and family credits, while the losers are those who currently get benefits such as the deduction for itemized medical expenses that would be eliminated.
At the top of the income scale, 76% of households with income over $1 million would get tax cuts exceeding $500. But 24% of households in that group would see their taxes rise. That may stem from the loss of tax deductions for state and local income taxes.
The analysis doesn't include the proposed elimination of the estate tax and a few minor provisions.
After 2022, a significant business tax break would expire and so would some family tax credits. So by the end of the decade, additional people would see tax increases compared to what would happen if Congress left tax law unchanged.
In 2027, among households making between $50,000 and $75,000, 42% would see tax cuts exceeding $500 while 24% would see tax increases. In that group, 16% would see changes in tax liability of under $100.
At the top, 66% of those making over $1 million in 2027 would pay less, while 33% would pay more, the study said.
The new analysis provides further detail on previous estimates from the JCT and the conservative-leaning Tax Foundation. They show average tax cuts at all income levels in the early years of the plan, with those cuts fading over time or turning into tax increases for some groups as provisions expire.
Republicans say future Congresses would extend provisions that would be set to expire. But that would make the real cost of what they are proposing far more than the $1.4 trillion in tax cuts over a decade technically in the bill now.
Write to Richard Rubin at email@example.com
(END) Dow Jones Newswires
November 07, 2017 12:26 ET (17:26 GMT)