GOP tax plan may offer little aid for many in middle class
WASHINGTON (AP) — House Republicans have stressed that the tax plan they unveiled Thursday is tailored to benefit America’s middle class. Just how much it would remains uncertain based on the details that have been provided so far.
What is clear is that many of the benefits for the middle class could dwindle over time, even while companies and wealthy individuals could enjoy lasting tax advantages.
The plan promises tax savings next year of $1,182 for a typical household of four with gross income of $59,000, leaving their tax bill at $400.
“We are focused on increasing paychecks in a major way,” said Rep. Kevin Brady, the Republican chairman of the House Ways and Means Committee.
But the proposal’s conflicting provisions and phase-outs of certain benefits suggest that taxes could rise for some middle class earners over time. And for many, the income gains being touted by President Donald Trump are unlikely to materialize.
Some of these complications arise because under the budget instructions, the planned tax cuts can’t increase the national debt by more than $1.5 trillion over the next decade. Anything above $1.5 trillion would force Republicans to amend their plan to generate more revenue — a change that would likely prove difficult.
Trump has frequently said that this would be the biggest tax cut in U.S. history. But outside analyses show that that’s not the case.
The tax plan’s primary beneficiaries would be wealthier Americans, who would enjoy lower tax rates despite the elimination of some breaks, a repeal of the so-called alternative minimum tax and the termination of the estate tax.
“With the details they’ve presented to us so far, it looks like the tax cut benefits the wealthy and major corporations,” said Martin Sullivan, chief economist at Tax Analysts and a former staff economist at the Treasury Department. “In fact, if you have a large family, given the facts that we have now, that you would pay more in taxes.”
A married couple making less than $90,000 would be taxed at a 12 percent rate, instead of the current 15 percent. The size of their standard deduction would nearly double to $24,000.
But that same couple would lose personal exemptions — deductions that largely benefit families with multiple children.