As Republicans in the House and Senate inch closer toward a consensus on a bill to overhaul the U.S. tax system, the American Association of Retired Persons (AARP) warns older Americans could be negatively impacted by the measures the GOP is aiming to pass.
While acknowledging that some taxpayers over the age of 65 would get relief under both the House and Senate versions of a tax reform bill, the group conducted a study with the Institute for Tax and Economic Policy (ITEP) and found that a large number of older Americans would endure negative consequences over the long-term.
In 2019, 20% of seniors, or 6.3 million individuals, would experience either no change in taxes, or a tax hike, under the Senate Finance Committee’s proposed legislation. Additionally, 29% of senior taxpayers with incomes below $65,150 would pay the same, or more, in taxes.
Over the next eight years, AARP and ITEP found that the number of taxpayers aged 65 and older who would pay more in taxes would increase four-fold. By 2027, 10.8 million seniors will have either seen no change in income tax or have been required to pay more.
“The bottom line is that even today’s 65+ as well as those who turn 65 by 2027 who benefit initially may end up paying higher and ever increasing taxes soon thereafter,” the AARP wrote in an article. “Further, as the result of growing deficits, they may receive reduced value from Medicare or other programs that are central to older Americans’ wellbeing.”
To pay for the tax reform proposals, the Congressional Budget Office (CBO) said the U.S. government could be forced to cut funding to federal programs in order to offset rising expenses. Barring congressional action, those cuts could result in a $25 billion reduction in Medicare spending by next year. More than 49 million Americans currently rely on Medicare for health coverage and enrollment is expected to reach 64 million by 2020, according to the AARP Public Policy Institute.
A final vote on the Senate’s tax cut legislation is expected to take place in the chamber later this week.