Anal­y­sis says Se­nate bill would in­crease taxes for 13.8 mil­lion

Yuma Sun - - OPINION -

WASH­ING­TON — Pro­moted as needed re­lief for the mid­dle class, the Se­nate Repub­li­can tax over­haul ac­tu­ally would in­crease taxes for some 13.8 mil­lion mod­er­ate-in­come Amer­i­can house­holds, a non­par­ti­san anal­y­sis showed Mon­day.

The as­sess­ment by Congress’ Joint Com­mit­tee on Tax­a­tion emerged as the Se­nate’s tax-writ­ing com­mit­tee be­gan wad­ing through the mea­sure, work­ing to­ward the first ma­jor re­vamp of the tax sys­tem in some 30 years.

Barg­ing into the care­fully cal­i­brated work that House and Se­nate Repub­li­cans have done, Pres­i­dent Don­ald Trump called for a steeper tax cut for wealthy Amer­i­cans and pressed GOP lead­ers to add a con­tentious health care change to the al­ready com­plex mix.

Trump’s lat­est tweet in­jected a dose of un­cer­tainty into the process as the Repub­li­cans try to de­liver on his top leg­isla­tive pri­or­ity. He 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?”

Over­all, the leg­is­la­tion would deeply cut cor­po­rate taxes, dou­ble the stan­dard de­duc­tion used by most Amer­i­cans, and limit or re­peal com­pletely the fed­eral de­duc­tion for state and lo­cal prop­erty, in­come and sales taxes. It car­ries high po­lit­i­cal stakes for Trump and Repub­li­can lead­ers in Congress, who view pas­sage of tax cuts as crit­i­cal to the GOP pre­serv­ing its ma­jori­ties at the polls next year.

With few votes to spare, Repub­li­can lead­ers hope to fi­nal­ize a tax over­haul by Christ­mas and send the leg­is­la­tion to Trump for his sig­na­ture.

The key House leader on the ef­fort, Rep. Kevin Brady, said he’s “very con­fi­dent” that Repub­li­cans “do and will have the votes to pass” the mea­sure this week.

Brady, 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.”

Trump and the Repub­li­cans have pro­moted the leg­is­la­tion as a boon to the mid­dle class, bring­ing tax re­lief to peo­ple with mod­er­ate in­comes and boost­ing the econ­omy to cre­ate new jobs.

“This bill is not a mas­sive tax cut for the wealthy . ... This is not a big give­away to cor­po­ra­tions,” Sen. Or­rin Hatch, R-Utah, chair­man of the Se­nate Fi­nance Com­mit­tee, in­sisted as the panel had its first day of de­bate on the Se­nate mea­sure.

Hatch also down­played the anal­y­sis by con­gres­sional tax ex­perts show­ing a tax in­crease for sev­eral mil­lion U.S. house­holds un­der the Se­nate pro­posal. Hatch said “a rel­a­tively small mi­nor­ity of tax­pay­ers could see a slight in­crease in their taxes.”

The com­mit­tee’s se­nior Demo­crat, Sen. Ron Wy­den of Ore­gon, said the leg­is­la­tion has be­come “a mas­sive hand­out to multi­na­tional cor­po­ra­tions and a bo­nanza for tax cheats and pow­er­ful po­lit­i­cal donors.”

The anal­y­sis found that the Se­nate mea­sure would ac­tu­ally in­crease taxes in 2019 for 13.8 mil­lion house­holds earn­ing less than $200,000 a year. That group, about 10 per­cent of all U.S. tax­pay­ers, would face tax in­creases of $100 to $500 in 2019. There also would be in­creases greater than $500 for a num­ber of tax­pay­ers, es­pe­cially those with in­comes be­tween $75,000 and $200,000. By 2025, 21.4 mil­lion house­holds would have steeper tax bills.

The an­a­lysts pre­vi­ously found a sim­i­lar mag­ni­tude of tax in­creases un­der the House bill.

Nei­ther bill in­cludes a re­peal of the so-called in­di­vid­ual man­date of Barack Obama’s Af­ford­able Care Act, the re­quire­ment that Amer­i­cans get health in­sur­ance or face a penalty. Sev­eral top Repub­li­cans have warned that in­clud­ing the pro­vi­sion, as Trump wants, would draw op­po­si­tion and make pas­sage tougher.

A key mod­er­ate Repub­li­can in the Se­nate said it’s too early to say whether in­clud­ing re­peal of the in­sur­ance man­date would cost her vote on the tax bill. “I’m go­ing to see what the Fi­nance Com­mit­tee winds up with and what we do on the (Se­nate) floor,” said Sen. Su­san Collins of Maine.

Collins did say she op­posed Trump’s idea of re­duc­ing the top tax rate for the wealth­i­est earn­ers.

Among the big­gest dif­fer­ences in the two bills that have emerged: the House bill al­lows home­own­ers to deduct up to $10,000 in prop­erty taxes while the Se­nate pro­posal un­veiled by GOP lead­ers last week elim­i­nates the en­tire de­duc­tion. Both ver­sions would elim­i­nate de­duc­tions for state and lo­cal in­come taxes and sales taxes.

Se­nate Ma­jor­ity Leader Mitch McCon­nell, R-Ky., asked whether the Se­nate’s pro­posed re­peal of the prop­erty tax de­duc­tion could bring higher taxes for some mid­dle-class Amer­i­cans, ac­knowl­edged there would be some tax­pay­ers who end up with higher tax bills.

“Any way you cut it, there is a pos­si­bil­ity that some tax­pay­ers would get a higher rate,” McCon­nell told re­porters af­ter a fo­rum in Louisville, Ken­tucky, with lo­cal busi­ness own­ers and em­ploy­ees. “You can’t craft any tax bill that guar­an­tees that ev­ery sin­gle tax­payer in Amer­ica gets a tax break. What I’m telling you is the over­all ma­jor­ity of tax­pay­ers in ev­ery bracket would get re­lief.”

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