Reduced taxes for all? Not for 7 percent
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WASHINGTON — A nonpartisan congressional report shows that many Americans would reap tax cuts under the Senate GOP’s tax revamp, but it undercuts Republican claims that virtually everyone would pay lower taxes.
Although the congressional Students at OSU protest tax provisions
Joint Committee on Taxation study shows that 60 percent of taxpayers in all income groups would see their taxes decrease in 2019, 10.4 percent of households with incomes between $75,000 and $100,000 a year — 13.8 million households in all — would pay at least $500 more annually in federal taxes.
In all, nearly 7 percent of all American households in 2019 would pay at least $500 a year in higher taxes under the plan, aimed at overhauling the federal income-tax code for the first time since 1986.
The same report shows that 15.6 percent of households earning between $100,000 and $200,000 a year would pay at least an extra $500 annually in federal taxes in 2019. By contrast, only 2.3 percent of households making $20,000 to $30,000 a year would pay at least $500 a year or more.
“Tax reform should be about one thing: putting money in the pockets of working people,” said Sen. Sherrod Brown, D-Ohio. “This bill fails that test. We must craft a bill that cuts taxes for the middle class.”
The Senate Finance Committee began work Monday on producing a bill that can be sent to the Senate floor this month. House Republicans are aiming for a floor vote on their tax bill later this week.
Brown and Republican Sen. Rob Portman of Ohio are both members of the finance committee.
The analysts previously found a similar magnitude of tax increases under the House bill.
During the committee session Monday, Portman cited a separate Tax Foundation study that shows a median-income Ohio family would save $2,375.
“I’ve heard a lot of talk today about middle-class tax cuts not being in this proposal,” Portman said. “I have to tell you — they’re here. That’s what all the analysis says. In Ohio, we’re going to see a tax cut for middle-class families. They are going to see tax relief that’s significant.”
The Republican bill offers millions of taxpayers the promise of lower income-tax rates in return for eliminating a number of deductions and exemptions, such as allowing Americans to deduct the amount of money they pay in state, local and property taxes, and scrapping the $4,050 personal exemption.
A key feature is the bill increases the standard deduction, which is the amount people who don’t itemize can deduct from their income, to $24,000 a year for married taxpayers and $12,000 for those who are single filers. Currently, the standard deduction is $12,700 for married couples filing jointly and $6,350 for single taxpayers.
If Americans choose the new higher standard deduction, they could not take deductions such as home mortgage interest, charitable contributions or medical expenses. But they could file their taxes on a single card.
By eliminating the state and local tax deduction, however, people in states with higher state and local taxes, such as New York, California and Massachusetts, will pay higher taxes than they do currently.
The bill creates seven individual tax brackets compared with just four in the House bill. The Senate brackets range from a low of 10 percent to 38.5 percent for the wealthiest taxpayers. The other five brackets would be 12 percent, 22.5 percent, 25 percent, 32.5 percent and 35 percent.
Barging into the carefully calibrated work that House and Senate Republicans have done, President Donald Trump called Monday for a steeper tax cut for wealthy Americans and pressed GOP leaders to add a contentious health-care change to the already complex mix.
In a tweet, Trump commended GOP leaders for getting the tax legislation closer to passage in recent weeks and then said, “Cut top rate to 35% w/all of the rest going to middle income cuts?”
That puts him at odds with the House legislation that leaves the top rate at 39.6 percent and the Senate bill as written, with the top rate at 38.5 percent.
Trump also said, “Now how about ending the unfair & highly unpopular individual mandate in (Obama)care and reducing taxes even further?”
Rep. Kevin Brady of Texas, chairman of the House Ways and Means Committee, said he doesn’t expect major changes to the bill as it moves to a final vote in the House. Still, he said Trump’s call for removing the requirement to have health insurance as part of the tax agreement “remains under consideration.”
A group of more than 400 millionaires and billionaires, including prominent figures such as Ben and Jerry’s founders Ben Cohen and Jerry Greenfield, designer Eileen Fisher and financier George Soros, asked Congress to reject the GOP tax plan and not give cuts to the superwealthy like themselves.
“We urge you to oppose any legislation that further exacerbates inequality,” they said in a letter made public Monday.