The GOP’s tax attack
The tax plan unveiled by House Republicans balloons the deficit, forces deep cuts to necessary federal programs, rains massive benefits on the wealthiest Americans, is a mixed bag for the middle class — and hammers states like New York with a beastly burden. Other than that, this is a pretty decent bill. Begin with red ink, in which the U.S. economy is already flooded like Houston after Harvey. The party that five minutes ago cared deeply about deficits would now inflate them by at least $1.5 trillion.
Yes, personal income tax rates will get somewhat simpler. The number of brackets falls from seven to four: 12%, 25%, 35% and 39.6%.
But the lion’s share of benefits from that shift falls on those in the top 1% — roughly, those making over $400,000; the 39.6% rate, which now applies to incomes over $470,701, would only hit those with incomes over $1 million. Below that, they’ll pay 35%, tops.
That’s only where their party begins. In a nation where the top 1% of Americans now control 38% of the nation’s wealth, a record high, provision after provision gives them still more help.
The estate tax is phased out entirely, a huge boon to the richest families. The Alternative Minimum Tax, designed to ensure that wealthy people don’t get away with tiny tax bills, is eliminated. A new low rate on pass-through income will benefit more of the most fortunate.
Meanwhile, the middle class gets what can be considered inconsistent benefits.
Many may do well because of rate cuts, and a hike in the standard deduction from $6,350 to $12,000 for single filers and to $24,000 for married, joint filers — particularly if they don’t itemize or are eligible for the expansion of the child tax credit.
But the ending of many deductions — including the personal exemption and the ability to write off student loan interest and medical bills — will hit others extremely hard.
That’s especially true here in New York and other (mostly) blue states, which already send far more to the federal treasury than they get back.
We get hit with the elimination of the deduction for state and local income taxes, effective punishment for providing expensive state and local services.
House Republicans can call it tax reform. It’s closer to fiscal civil war.