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The GOP’s model family gets a tax cut in year 1 … and a tax hike in year 7

House GOP leaders on Nov. 2 proposed legislation that would overhaul the U.S. tax code. (Video: Monica Akhtar/The Washington Post)

House Speaker Paul D. Ryan spoke often Thursday (and tweeted) about how a typical family of four that makes $59,000 a year would get a $1,182 tax cut, but that's only in the first year. There are already serious doubts about how much the middle class benefits from the GOP plan — and for how long.

Ryan's correct that $59,000 is smack dab in the middle of the income spectrum. It's the median income in the United States, meaning half of households make more in a year and half make less. He's also right that this family would pay $1,182 less than they paid in 2017. But that model family would get a tax hike by 2024, according to an analysis by David Kamin, a tax law professor at New York University.

It's “totally absurd,” Kamin says. “The tax cuts for the middle class are all front loaded.”

One of the key provisions in the GOP tax bill to help middle class families is a new Family Flexibility Credit of $300 for each tax filer and another $300 for a spouse. But that credit expires after five years, making the math for the middle class A lot less rosy. In 2023, the year the tax credit would go away, the $59,000 family would barely get any tax reduction at all, and by 2024, there would be an increase, Kamin found.

When The Washington Post asked Ryan's office about this, they deferred to the House Ways and Means Committee. A spokeswoman there sent over the breakdown for how the $59,000 family gets a tax cut in the first year, but not what happens in the following years.

There are trade-offs in any tax bill. As the Ways and Means Committee worked late into the night to finalize its plan, the members made a last-minute decision to help big businesses at the expense of the middle class, by making a major change to the Family Flexibility Credit. According to a person familiar with the negotiations, who spoke on the condition of anonymity because they were not authorized to speak publicly, Republicans expect the tax break for the middle class will be extended, although it's not clear right now how that would happen.

If Republicans help the middle class more, they either have to scale back business tax cuts or add even more to the debt. The package already adds $1.5 trillion to America's debt over the next decade. Adding any more would run afoul of the process Republicans hope to use to get the bill through the Senate with a simple majority — something critical to its chances of passage because of broad Democratic opposition.

Kamin's analysis is just for one family making $59,000 a year. Later today, the Joint Committee on Taxation is expected to release a report detailing what happens to families across the income spectrum under this tax plan. JCT is a nonpartisan group that is the official scorekeeper on how much congressional tax bills cost and who wins and loses.

Early estimates predict that a sizable number of middle class families will see a tax increase under this plan. The New York Times estimated that 13 million people making less than $100,000 would see a tax increase under the GOP bill, based on an open-source model called TaxBrain. Ernie Tedeschi, an economist who served in President Barack Obama's Treasury Department, predicted that 25 million families would face higher taxes in 2018 under the plan and 47 million by 2027.

Another issue Kamin found is that the Family Flexibility Credit and the expanded Child Tax Credit ($1,600 a year per child instead of $1,000 per child now) are not indexed to inflation, meaning the amount of the deduction does not go up over time even as the things families would want to buy with that credit do. These credits are supposed to replace the current personal exemption, which is indexed to inflation.

Almost every bill gets changed between the time it is introduced and the final vote. Since middle-class tax relief is a core promise of Trump's, Republicans are likely to revisit this if the JCT official assessment shows a higher number of families would be worse off under the bill.

“We also have another bright line test as we need to deliver middle class, middle income, hard-working families — we need to deliver them a tax cut. Those are the two areas where the president won’t budge. Everything else, we’re pretty flexible on,” Gary Cohn, Trump's top economic adviser, told Fox Business on Friday.

The Senate is also still crafting its own version of the tax plan.

Sen. Patrick J. Toomey (R-Pa.), a member of the Senate Finance Committee, said Friday that if he had his way, the family credits “would all be permanent.”

“We're going to have to make some tough decisions about what can be permanent and what has to expire,” Toomey said.