The House Republican tax bill would raise taxes on many middle-class households, even as it cuts taxes for most people across the board, according to an analysis set for release Tuesday by Congress’ own tax experts. The GOP tax overhaul also would raise taxes on more families over time, as a temporary tax credit for parents expires and inflation pushes people into higher tax brackets.
The Joint Committee on Taxation, the nonpartisan panel that provides tax analysis to Congress, found that one in every 12 tax returns would see a tax increase in 2019 under the Tax Cuts and Jobs Act, which House Republicans are advancing through committee this week.
More higher-earning families would face tax increases under the plan. But a minority of people up and down the income spectrum would face tax increases. Nearly 10 percent of people earning between $50,000 and $75,000 would get hit with a tax increase.
That is true even though all tax brackets would see tax cuts on average.
While the plan’s lowered tax rates and doubled standard deduction, with bigger child tax credits, would provide tax breaks for most, some people in unusual tax situations would likely not benefit. The official analysis doesn’t explain who those groups are, but it’s possible that they are people who have unusually high itemized deductions, such as for medical expenses and state and local taxes.
Over time, the number of people hit by higher taxes would increase. That’s largely because a new $300 parent tax credit created by the bill would phase out in the bill. But it’s also because the bill would institute a new, stingier measure of inflation for indexing tax brackets, forcing people people into higher brackets over time.
By 2027, fewer than half of individuals would see non-negligible tax cuts.
Republicans are betting that the parent tax credit will be retained by future congresses and that more families will be protected from higher taxes.
“Every American will be better off under this plan,” House Ways and Means Committee Chairman Kevin Brady said on Fox News on Tuesday, declining to say that every family would directly get a tax cut. The Trump administration and Republicans also have said that individuals would benefit not just from tax cuts but also from the faster economic growth that comes with business tax reform.
Democrats, meanwhile, sought Tuesday to make Republicans pay a price for repealing the ability to deduct state and local income and sales taxes.
“Your district’s screwed under this,” Rep. Joe Crowley, D-N.Y., told a Republican member of the committee from his state during Tuesday’s markup.
Nevertheless, some Republican lawmakers are calling for revising the plan to ensure that it doesn’t raise taxes on even a minority of people.
“I think we need to do even more to provide a tax cut, not just tax reform, but a tax cut to every working American,” said Sen. Ted Cruz, R-Texas, speaking at the Capitol on Tuesday.
