Senate Plan to Hike Taxes on Some Lower Incomes, JCT Says
(Bloomberg) -- The revised Senate Republican tax proposal would lead to a 13 percent tax hike on Americans making between $20,000 and $30,000 per year by 2021, according to an analysis by the Joint Committee on Taxation.
Those earning from $500,000 to $1 million would see the biggest cut in taxes -- 8.5 percent -- by 2021, the JCT said Thursday. The JCT is one of Congress’s official scorekeepers and responsible for analyzing the tax plan’s effects.
The hit to the $20,000 to $30,000 cohort complicates the Republican message of widespread tax relief for working Americans. Other recent studies show that plenty of benefits would go to the highest earners -- and some middle-class taxpayers might actually pay more. Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan have walked back guarantees that no one in the middle class would see a tax increase under their plans.
“I expect our friends on the other side will try to make some hay about the new table this morning and that’s their right,” Senate Finance Chairman Orrin Hatch said Thursday morning during his committee’s markup of the proposal. “Obviously we have no intention of raising taxes on these families.”
After 2021, earners making from $20,000 to $30,000 would continue to see a tax increase -- rising to a 25 percent hike by 2027. That year those making less than $75,000 would see a tax increase, the JCT said. Meanwhile, those earning more than $75,000 would still see small cuts.
“This morning, people across the country are waking up to confirmation that this bill pays for massive handouts to corporations with a multi-billion dollar tax hike on people who can’t afford it,” Senator Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, said referring to the JCT analysis.
The revised Senate plan released late Tuesday would sunset individual breaks by 2026 and in 2019 repeal the Obamacare requirement that individuals have health coverage to comply with the Senate’s rigid fiscal rules.
The negative impact on incomes from $20,000 to $30,000 may result from the provision to repeal the Obamacare individual mandate. Without the mandate, millions of lower-income Americans are projected to drop their insurance coverage, according to the Congressional Budget Office. That means they would not be eligible for refundable tax credits under the health-care law.
Hatch said JCT assumed that some people in lower income bracket wouldn’t purchase health insurance and then wouldn’t take advantage of tax credit subsidies. “In the world that exists outside those assumptions, people will be making their own choices,” Hatch said.
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