Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

Corporate gatekeepers and big tech monopolists are making it more difficult than ever for independent media to survive. Please chip in today.

It’s a great deal for the wealthiest Americans and large corporations, and a lousy one for the middle and working class.

"It’s a great deal for the wealthiest Americans and large corporations, and a lousy one for the middle and working class." (Photo: AP/J. Scott Applewhite)

Are You In One Of The 36 Million Families Whose Taxes Will Go Up Under the House Bill?

It will also hit hard for student loan recipients and people with high medical expenses.

Jeremy Slevin

 by TalkPoverty.org

This week, without a single hearing, the House of Representatives is expected to vote on the “Tax Cuts and Jobs Act.” After weeks of claiming that all middle-class taxpayers would see a tax cut, Senate Majority Leader Mitch McConnell (R-KY) took the rare step of admitting to a lie over the weekend, telling The New York Times, “You can’t guarantee that absolutely no one sees a tax increase.” And on Friday, House Speaker Paul Ryan (R-WI) also sought to walk back his claims, from promising tax cuts to “everyone” to assuring “average” taxpayers that they would see a cut. Now, new analysis shows just how many middle- and working-class Americans would see a tax increase under their tax plan.

According to analysis by the Center for American Progress based on Tax Policy Center data, 36 million working- and middle-class households would see a tax increase by 2027 under the House tax bill. Based on the latest version of the tax plan, 22.5 percent of tax units (tax parlance for households) in the bottom 80 percent of the income scale would see their taxes go up by 2027, at an average cost of a whopping $1,130 per family with a tax increase. With more than 159 million households in these income brackets, 36 million would end up facing a tax increase.

t17-0256

Source: Tax Policy Center.

And what’s most striking is just how many of the tax increases in the bill fall on middle class and struggling families. In fact, the middle and working class will comprise the overwhelming majority of those facing tax increases under the House bill (36 million out of 45 million households facing tax increases).

So, how does this happen? The short answer is that the House tax bill is so heavily tilted toward corporations and high-income taxpayers that they have to raise taxes on many middle-class families in order to pay for it. The largest tax cut, which would lower the corporate rate from 35 percent to 20 percent, would cost about $1.5 trillion over 10 years. There is also a new tax loophole for President Donald Trump himself—cutting the top rate on “pass-through” income from 39.6 percent to 25 percent. The bill eliminates the Alternative Minimum Tax, which also exclusively benefits households with incomes above $200,000. And it repeals the estate tax after 5 years, which is paid by the wealthiest 0.2 percent of estates and will cost about $240 billion over the next decade.

As Rebecca Vallas and I outlined last week, this is partially offset with a series of tax cuts on the working and middle class. Some of the hardest hit will be student loan recipients: Nearly 12 million will be affected by repeal of the student loan interest deduction. Graduate students will be hit even harder, since the House tax bill proposes taxing tuition paid by their universities, which will raise taxes by nearly $10,000 on some students.

The plan also eliminates the Work Opportunity Tax Credit—an incentive for businesses that hire disabled veterans and people who have been looking for work. And, perhaps most egregiously, the House bill ends tax benefits for people with high medical expenses. This would fall particularly hard on seniors in need of long-term care and families of Alzheimer’s patients.

Importantly, the bill’s “Family Flexibility Credit”—a provision in the bill that does benefit the middle class—would expire after 5 years, even though nearly every other tax cut (corporate tax cut, the Trump “pass-through” loophole, estate tax elimination, and the elimination of the alternative minimum tax) would continue indefinitely.

Paul Ryan and Mitch McConnell may want to tout the middle-class benefits of their tax bill, but if one thing is clear from the current tax legislation, it’s this: It’s a great deal for the wealthiest Americans and large corporations, and a lousy one for the middle and working class.

Alex Thornton, Seth Hanlon, and Alex Rowell all contributed analysis.


© 2021 TalkPoverty.org
Jeremy Slevin

Jeremy Slevin

Jeremy Slevin is the Associate Director of Advocacy for the Poverty to Prosperity Program at the Center for American Progress.

 

 

We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.

'We Have to Flip This Seat': After Senate Primary Win, Fetterman Shifts Focus to Beating GOP

"This is the most important race in the country," said Democratic U.S. Senate nominee John Fetterman. "Control of the Senate is going to come down to Pennsylvania."

Jake Johnson ·


Kentucky Progressive Charles Booker Wins Democratic US Senate Primary

"We're going to beat Rand Paul," Booker confidently predicted, by "inspiring a vision that encourages people to believe things can be better."

Brett Wilkins ·


As Senators Try to Expand War Crimes Jurisdiction, Critics Ask if US War Criminals Count

"I've got names and addresses of American war criminals if any senators are interested," quipped veteran journalist Nick Turse.

Brett Wilkins ·


Climate Campaigners Demand Oxford, Cambridge Stop Taking Fossil Fuel Money

"This funding undermines climate justice, fueling the continued disproportionate harms of the fossil fuel industry on marginalized communities worldwide."

Julia Conley ·


Palestine Defenders Hail Rep. Tlaib's 'Historic' Nakba Resolution

"The time has come for the United States to correct an ongoing historical mistake it committed by recognizing the Palestinian Nakba, and to pressure Israel to respect American values that call for justice, equality, and freedom for all."

Brett Wilkins ·

Common Dreams Logo