The GOP’s Tax Cut and Jobs Act would reduce taxes across all income groups on average next year, but in 10 years more than one-quarter of Americans would experience an increase in taxes, a new study showed.
Continue Reading Below
According to a new analysis by the Tax Policy Center, overall average after-tax income would increase by 1.5% next year if the Republican tax bill passes in its current form. However, a little more than 12% of taxpayers would owe more in 2018. In 2027, 28% of Americans would experience a tax increase when compared with the current law.
The study also showed that the highest benefits would accrue for the wealthiest Americans.
Those with incomes under $48,000 could expect to receive tax cuts between 0.3% and 0.5% of after-tax income next year, the Tax Policy Center found. Those with average incomes between $48,000 and $86,000 would receive a tax cut worth 1.2% of after-tax income, or about $700. The top 1% of American taxpayers, or those with incomes in excess of $730,000, would receive 22% of the total tax break with an average cut of $37,000, or 2.5% of after-tax income.
By 2027, taxpayers could expect their tax cuts to shrink to about $700 on average as provisions in the bill expire.
On Thursday, the Republican Party unveiled the details of its long-awaited legislation, which it claimed would save the average middle-income family of four $1,182. The GOP proposed collapsing the current seven-tier bracket system into just four: 12%, 25%, 35% and 39.6%. The highest rate is in line with the current top tax rate, but kicks in at an income level of $1 million for married couples. Currently the top rate applies to those with incomes in excess of $470,700.
Additionally, the plan would leave retirement plans untouched, lower the corporate tax rate by 15 percentage points and phase out the estate tax over the course of six years.