Democrats’ new plan ups taxes on everybody
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.