Middle class Americans facing tax increase under House plan
To pass their immense tax giveaway to the rich, Republicans need to ensure that their plan would add no more than $1.5 trillion to the deficit over the next decade. To do so, they’re cutting billions of dollars in tax benefits to people trying to raise children, pay for college, buy a home or invest in renewable energy.
That is why taxes would go up for about 45 percent of middle-class taxpayers by 2026 under the House bill, according to an analysis by The New York Times. By contrast, the people in the top 1 percent of income will get an average tax cut of $64,720 a year by 2027, according to the Institute on Taxation and Economic Policy. Even the congressional Joint Committee on Taxation concludes that the tax cuts are heavily tilted toward the rich. Yet, Republicans may take the knife to even more middle-class benefits, because the Congressional Budget Office said Wednesday that the bill would exceed the $1.5 trillion target by nearly $200 billion.
If the bill exceeded the $1.5 trillion deficit threshold, it would have to be considered under rules requiring 60 votes in the Senate for passage, rather than a simple 51-vote majority. But whether the provisions in the bill are procedural necessities or just incredibly meanspirited, these are some ways they could hurt your family if you:
Are planning to adopt a child: The bill eliminates the adoption tax credit, which is worth $13,570 per child to parents dealing with adoption procedures that can cost tens of thousand of dollars. This would offset $3.8 billion in tax cuts over 10 years — not much in a federal budget of $4 trillion a year, but every dollar counts!
Want to invest in wind projects: The production tax credit for renewable energy will become less valuable under the Republican proposal, raising $12.3 billion in revenue.
Have or develop chronic illnesses: Republicans want to get rid of the medical expenses deduction, which is primarily used by families grappling with serious
It is not surprising that Republicans want to cut taxes on businesses and the wealthy. But they should stop pretending this terrible proposal is a favor to average Americans, when many of them will be left a good deal poorer.
health problems. Nearly 9 million taxpayers deducted $84 billion in such expenses from their taxes in just 2015; eliminating it would offset about $182 billion in tax cuts over 10 years.
Have dependents you need to take care of: Under the proposal, dependent-care benefits that families receive from employers for things like day care or elder care, including flexible spending accounts, will become taxable. More than one-third of private-sector workers and more than half of state and local government workers had such benefits in 2014, according to the Bureau of Labor Statistics. Currently, up to $5,000 a year in such benefits is exempt from taxes. This provision would offset $6.5 billion in tax cuts.
Want to move for a better job: The bill would repeal the deduction for moving expenses when families relocate for a new job that is at least 50 miles away. Not helping people move to areas with better economic opportunities would pay for $10.6 billion in tax cuts.
Want to keep up with inflation: One of the biggest changes in this bill is a technical one involving how income thresholds, credits and other parts of the tax code are adjusted for inflation. This will end up pushing middle-class taxpayers into higher brackets and making credits and deductions less valuable over time, all in the service of paying for $128 billion worth of tax cuts.
Need help paying for college: The bill repeals numerous education deductions and credits. It also makes taxable the value of the tuition and other benefits universities give to their graduate teaching and research assistants. Ditto for education benefits offered by employers to their workers. Who cares about educating the next generation when you can bring in an extra $65 billion?
Want help buying a home: The Republicans want to end a program that lets state and local governments issue private-activity bonds to finance housing and let homeowners claim a tax credit on certain mortgages. This could reduce affordable housing construction and renovations of existing properties, experts say. Chalk up $38.9 billion for tax cuts.
Are an undocumented parent raising a child who is a U.S. citizen: The House bill would require at least one parent to have a Social Security number to claim the refundable portion of the child tax credit. Hurting young citizens in this way would add up to $21.7 billion.
Are an undocumented student: House Republicans want to require students to provide a Social Security number to claim the American Opportunity Tax Credit for tuition and elated expenses. This measure will chip in $800 million.
Want to buy an electric car: The House bill would get rid of a $7,500 tax credit for electric car purchases starting with vehicles that hit the road next year; the measure would bring in a modest $200 million.
It is not surprising that Republicans want to cut taxes on businesses and the wealthy. But they should stop pretending this terrible proposal is a favor to average Americans, when many of them will be left a good deal poorer.