Well, sort of. The House plan allows property taxes to be deducted only up to $10,000. That’s not nothing, but it’s not exactly a full deduction either. As for the Senate tax-reform proposal, it eliminates the break entirely.
Confusing, huh? This could benefit from a serious slow-down, so everyone can compare the two plans calmly and come to a reasoned, measured and thoughtful conclusion. Right?
But that’s not happening. House Republicans are planning to vote on their proposal by the end of this week.
What could account for this rather unseemly rush? Try this: The more people see or hear of these plans, the less they seem to want anything to do with it. That’s certainly the conclusion you could draw from last week’s Politico-Morning Consult poll, which found that when they told voters about ten aspects of the proposal, 53 percent say they were in favor of it. That sounds great — till you discover that 61 percent said the same thing the week before.
As for CNN, its polling found that only 1 in 5 voters they surveyed said they would do financially better as a result of the Republican plans. Almost 1 in 3 said they would end up in a worse position.
The trend lines here, as they say, are not good.
Yet Republicans continue to say they are convinced they need to accomplish something — nay, make that anything — before they face voters again. But when it comes to the tax plan, there is a catch. They need to do it fast. Again, let me make the point: The longer people dwell on the plan, it seems likely they will realize that even if they benefit by a small amount, they are being played for chumps.
It is true that the plan will help some people. As Richard Rubin points out in the Wall Street Journal, all but doubling the standard deduction and doing away or reducing many specific and targeted deductions will result in a significantly simpler return for many people, something many are bound to appreciate. Many people in every income group will at least initially receive a federal tax cut, even if the dollar amount for low-income tax filers is rather small.
But others in those income groups will get a tax hike — if not in 2019, then in the years after. To take just one example, people with medical expenses that are in excess of 10 percent of their household’s adjusted gross income will no longer be able to take a tax write-off for them under the House plan. The Senate plan keeps the break. For those who are playing along at home, the majority of those taking this deduction enjoy five-figure household incomes. More than half are over the age of 65. Fast-living high rollers they are not. We don’t know what the final version of the tax bill will do on this front, but it’s plausible those people will end up losing out, which, again, helps explain why Republicans are moving so fast.
Here are two other ways people might lose out: The House plan eliminates the ability to write off the cost of moving for a new job more than 50 miles away. The Senate does as well, though military members retain it. The House bill also does away with the $250 deduction teachers are permitted to take for spending their own money on classroom supplies.
And, of course, as mentioned above, there is little doubt that many residents of high-tax, high-cost real estate states will end up on the losing end of the tax-reform stick. As Heather Long points out, “Over a third of filers in many Democratic states such as California, New York, New Jersey and Connecticut claim the SALT deduction on their returns.”
But here is one thing we do know: While there are numerous takes on the impact of the House plan, the impact of the Senate plan and their effects over time, there is one thing that unites them all: There is no question the top 1 percent will benefit significantly.
A New York Times analysis of the House bill found that while taxes would ultimately increase for 45 percent of middle-income households by 2026, the top 1 percent will receive, on average, a break of almost $65,000 by 2027. Bloomberg’s analysis of the congressional Joint Committee on Taxation’s breakdown of the Senate tax reform plan found that in 2019, the average filer with an income between $50,000 and $75,000 would save a whopping $688, while those with earnings of more than $1 million would gain an additional $58,000.
Little wonder the Republicans are trying to speed this tax bill through the process. The more questions voters ask about it, the more uncomfortable it’s going to get for them.