Analysis: Senate tax bill cuts taxes of wealthy and hikes taxes on families earning under $75,000 over a decade
Most of the hit to the poor and working-class is likely comes from the Senate Republicans' push to mix health care and tax changes.
The tax bill Senate Republicans are championing would give large tax cuts to millionaires while raising taxes on American families earning $10,000 to $75,000 over the next decade, according to an analysis released Thursday by the Joint Committee on Taxation, Congress' official nonpartisan analysts.
President Trump and Republican lawmakers have been heralding their bill as a win for hard-working Americans, but the JCT report casts serious doubt on that claim. Tax hikes for households earning $10,000 to $30,000 would start in 2021 and grow sharply from there. By the year 2027, Americans earning $30,000 to $75,000 a year would also be forced to pay more in taxes even though people earning over $100,000 continue to get substantial tax cuts.
"What is happening now is just shameful," said Sen. Ron Wyden (D-Oregon) in the Senate Finance Committee hearing shortly after the JCT tables were released. "I don't know how anybody can go home and explain why it's a good idea to hike taxes on parents who barely stay afloat to pay for a massive corporate handout."
Most of the hit to the poor and working-class is likely comes from the Senate Republicans' push to mix health care and tax changes. The decision to include a repeal of the individual mandate would lead to 13 million more uninsured, the Congressional Budget Office has said. Senate Republicans also made most of the individual income tax provisions expire at the end of 2025, which is why most taxpayers below $75,000 end up paying more after a decade. Wealthier Americans would still benefit from a permanent cut in the corporate tax rate, which will likely boost the incomes of people who own companies or investments.
Senator Orrin Hatch (R-Utah), the lead author of the GOP tax bill, dismissed the table as an accounting gimmick.
"Anyone who says we're hiking taxes on low-income families is misstating the facts," Hatch said. "Obviously we have no intention of raising taxes on those families. Every Republican on this committee has been committed to providing tax cuts for every income cohort."
Republicans and Democrats are fiercely debating whether what's happening to low-income Americans is truly a tax hike. According to the JCT, the average tax rate for people working full-time minimum-wage jobs and those earning $20,000 to $30,000 would go from 3.7 percent to 4.2 percent. Meanwhile millionaires' average tax rate would fall from 32.4 percent to 30.9 percent.
Hatch and other Republicans say that low-income people get a choice about whether to buy health insurance or not. If they no longer wish to buy insurance, they would not get government subsidies anymore to help make their health insurance more affordable. JCT is calculating that as a tax increase, but Republicans say it is "ridiculous" to look at it that way. The subsidy was being paid to the insurance company, not to individuals.
"Did we take away their money? No," says Sen. Mike Crapo (R-Idaho). "There's not one dollar taken away from them if they make that choice [not to buy insurance]."
Democrats point out that it's more than the insurance subsidy at stake. By 2027, all Americans earning less than $75,000 see an increase, partly because the individual tax cuts go away after 2025.