Democrats’ new plan ups taxes on ev­ery­body

The Washington Times Weekly - - National - By S.A. Miller

The tax plan that Democrats tout as mid­dle-class tax cut would soon in­crease taxes for most mak­ing less than $75,000 a year, ac­cord­ing to a con­gres­sional re­port.

About 71 mil­lion fam­i­lies in that group will pay $59 bil­lion more in 2011, while 8 mil­lion pay nearly $3 bil­lion less and the re­main­ing 4 mil­lion pay the same amount as they do now, said the re­port by the Joint Com­mit­tee on Tax­a­tion (JCT), the tax anal­y­sis of­fice for Congress.

Of those tax­pay­ers, most fam­i­lies mak­ing $20,000 to $50,000 a year — about 41 mil­lion fam­i­lies — will pay $32 bil­lion more in taxes in 2011, ac­cord­ing to the anal­y­sis of the plan in­tro­duced last month by Rep. Charles B. Ran­gel, New York Demo­crat and chair­man of the Ways and Means Com­mit­tee.

“What Chair­man Ran­gel’s bill does is any­thing but a tax cut,” said Rep. Jim McCr­ery of Louisiana, rank­ing Repub­li­can on the Ways and Means Com­mit­tee, who re­quested the JCT anal­y­sis and shared it with The Wash­ing­ton Times.

“It cer­tainly calls into ques­tion Chair­man Ran­gel’s claims that his tax bill ben­e­fits the mid­dle class and low-in­come peo­ple,” Mr. McCr­ery said. “It is a tax in­crease for the vast ma­jor­ity of Amer­i­cans of any in­come cat­e­gory.”

“The bot­tom line is very sim­ple: If you pay taxes now, you’re go­ing to pay a lot more if the Democrats pass this tax hike,” said House Mi­nor­ity Leader John A. Boehner, Ohio Repub­li­can. “You can’t pro­pose the largest tax in­crease in Amer­i­can his­tory and ex­pect that it won’t land squarely on the shoul­ders of mid­dle-class fam­i­lies.”

Repub­li­cans es­ti­mate the pro­posed changes will ini­tially raise taxes by $1.3 tril­lion over 10 years, and the Democrats’ plan to let ex­pire Pres­i­dent Bush’s 2001 and 2003 tax cuts will bring the tab to $3.5 tril­lion in that pe­riod.

The bulk of the tax-code re­write, dubbed the “mother of all tax re­forms” by Mr. Ran­gel, will not be taken up this ses­sion but it pro­vides a blue­print for Demo­cratic tax pol­icy.

The plan would de­liver tax cuts to most mid­dle-in­come fam­i­lies the first year but those sav­ings would soon evap­o­rate, re­placed by ris­ing tax bills as the pro­vi­sions are fully im­ple­mented and Mr. Bush’s tax cuts ex­pire.

The first year, ac­cord­ing to the anal­y­sis, Mr. Ran­gel’s plan would de­liver on its prom­ise to soak the rich and slash mid­dle-class taxes, hit­ting top earn­ers with $73 mil­lion more in taxes while those earn­ing less than $100,000 would save about $15 bil­lion.

Most fam­i­lies will pay more by 2011, and for those mak­ing more than $50,000 a year the tax bill will rise fur­ther by 2017. About 22.7 mil­lion earn­ing be­tween $50,000 and $75,000 will pay $23.2 bil­lion more in taxes that year.

Across all in­come brack­ets, more than 120 mil­lion tax­pay­ers will pay $440 bil­lion more in taxes by 2017, while 9 mil­lion will pay $12.4 bil­lion less, the re­port shows.

Mr. Ran­gel’s leg­is­la­tion, ti­tled the Tax Re­duc­tion and Re­form Act of 2007, would be the largest over­haul of the tax code since 1986.

The bill’s cen­ter­piece is the elim­i­na­tion of the al­ter­na­tive min­i­mum tax (AMT), a spe­cial 1969 in­come tax de­signed to en­sure the rich pay at least some tax but which will now hit mid­dle-in­come fam­i­lies if not kept at bay by tem­po­rar y “patches” passed by Congress.

The House will take up a oneyear AMT patch af­ter Congress’ Thanks­giv­ing break that will stop the tax from wal­lop­ing fam­i­lies this year mak­ing as lit­tle as $50,000 an­nu­ally.

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