Both the New York Times and the Joint Committee on Taxation (JCT) are out with analyses of the GOP House tax bill. The news is not helpful to Republicans. Worse still is mounting opposition on the right.
The Hill reports that according to the JCT, 61 percent of taxpayers would pay less in the first year while 8.3 percent would pay more. Unfortunately for House Speaker Paul D. Ryan (R-Wis.), who’s been touting a savings of more than $1,000 for the average family, “Almost a third of taxpayers would not see a change of more than $100 in their favor or against them.” Then by 2027, things get really problematic: “By 2027, for example, 22.5 percent of those making $40,000 to $50,000 per year would see taxes go up by over $100, as would 23.7 percent of those making $50,000 to $75,000 and 25.9 percent of those earning between $75,000 and $100,000.” If the purpose of this bill is to put money in the hands of middle-class taxpayers, it does a lousy job.
Then the Times reports: “Nearly half of all middle-class families would pay more in taxes in 2026 than they would under current rules if the proposed House tax bill became law, and about one-third would pay more in 2018, according to a New York Times analysis, a striking finding for a bill promoted as a middle-class tax cut.” As with the JCT study, things get worse over time. (“By 2026, 45 percent of middle-class families would pay more than what they would under the existing tax system.”)
Minority Leader Sen. Charles E. Schumer (D-N.Y.) seized on the numbers. “The Republicans either reduce or eliminate several critical middle-class tax deductions,” he said on the floor. “The elimination of the personal exemption, for example, which lets families deduct roughly $4,150 for each person in the household, would be costly for families of three or more. … In many cases, the new benefits provided to the middle class are insufficient to fill the gap created by the loss of popular deductions, and worse, many of the benefits are temporary — expiring after several years. So while some in the middle class may get an initial tax break, a few years down the line that break will disappear and taxes will start going up.”
In short, the GOP’s claims of a “middle-class tax cut” are not holding up well. Moreover, business groups are now objecting to the bill. The Club for Growth objects to a higher tax on millionaires and the slow pace of the estate-tax repeal (!). It does not think the 25 percent pass-through is generous enough. Other groups object to the provisions that are aimed at preventing corporations from shifting profits abroad.
Now we are seeing staunch conservatives such as Sen. Ted Cruz (R-Tex.) oppose the bill because they say no one’s taxes should go up. That’s music to Schumer’s ears; he’s been worrying that taking away the state and local tax deduction will hit hurt blue-state residents.
This doesn’t mean that the bill will change dramatically or won’t get through the Ways and Means Committee. It does mean that the vote on taxes is beginning to resemble the vote on repealing Obamacare — helping the rich get richer with little benefit to the middle class. Tax cuts are supposed to be easy to pass because you’re essentially handing out money. But House Republicans have managed once again to come up with something worse than the status quo. That will make it hard to round up votes in the House to pass this. Just as in the health-care debate, that hard vote will be for nothing if, as it appears now, there are not even 50 votes to pass it in the Senate. Republicans really aren’t very good at this governing stuff.