Wealthy get biggest benefit from House GOP tax plan, analysis finds

WASHINGTON—As a House committee on Monday pushed toward a vote on the Republican tax legislation, two potential obstacles emerged from opposite ends of the political spectrum.

A new report said the greatest benefit of the plan would go to upper-income households, providing fuel for Democratic opposition to the bill.

And conservative groups aligned with the wealthy Koch brothers raised concerns about a complicated excise tax proposed for foreign transactions of multinational companies.

Members of the House Ways and Means Committee began several days of debating the bill and considering amendments. The bill centers around a large cut to the corporate tax rate and a simplification of the individual tax code that reduces rates but also scraps or scales back some popular deductions, such as those for mortgage interest and state and local income taxes.

Looming ahead is an even tougher battle in the Senate, where Republicans have a razor-thin majority, and several GOP senators have raised objections to adding $1.5 trillion to the deficit. Senate Republicans plan to roll out their bill Thursday.

Lawmakers in both the House and Senate are hearing objections from many outside groups—including evangelicals hoping to preserve an adoption tax credit and local governments fighting to keep the tax exemption for certain municipal bonds.

An analysis released Monday by the nonpartisan Tax Policy Center said that middle-income taxpayers— those earning between $48,600 and $86,100 annually—would receive an average tax cut of $700 next year, or about 1 percent of their after-tax income.

The top 20 percent of the nation’s earners—those making more than $149,400 a year—would receive an average tax cut of $4,850, or about 1.4 percent of after-tax income. The top 1 percent of earners, defined as those making more than $730,000 a year, would see a cut of more than $37,000, or about 1.7 percent of their after-tax income.

Those top earners would also receive 60 percent of the total amount of tax cuts in 2018 under the plan. Of that, the top 1 percent of earners receive about 22 percent, the Tax Policy Center said.

By contrast, middle-income earners would receive about 12 percent of the tax benefit. Those making less than $48,600 would get 3.9 percent.

By 2027, when the estate tax is fully phased out, the top 1 percent of earners would receive 48 percent of the benefit of the bill’s cuts. Middleincome earners would get 8 percent of the benefit.

On average, taxes would decline across all income groups initially and for most income groups after a decade, the analysis said.

But not all taxpayers would see a cut. At least 12 percent of filers would face higher taxes next year.

And in 2027, 28 percent would have higher tax bills because some provisions in the legislation, such as the new family tax credit, are temporary, the analysis said.

At the same time, Freedom Partners, which is funded by the Koch brothers and its network of donors, compared the proposed excise tax to a controversial bordertax that they helped kill this summer as congressional Republicans and the Trump administration were crafting the legislation.

“This new 20 percent tax would apply to cost of goods sold, which could ultimately saddle consumers with higher costs, undermining the economic benefits of the larger bill,” Nathan Nascimento, Freedom Partners vice president of policy, wrote in a letter Monday to committee members.

Brady said the excise tax is “nothing like” the border tax.