GOP tax plan may of­fer lit­tle aid for many in mid­dle class

Sun.Star Pampanga - - BUSINESS! -

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.”

Here’s why:

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.

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