Senate Plan Would Eventually Hike Taxes on Families Earning $75,000 or Less

Senate Plan Would Eventually Hike Taxes on Families Earning $75,000 or Less

iStockphoto/The Fiscal Times

The latest analysis by the Joint Committee on Taxation casts further doubt on GOP claims that their tax bill represents a big win for American workers and the middle class. The report released Thursday by the congressional tax scorekeeper finds that the revised Senate bill would give Americans across all income groups a tax cut in 2019, on average, but by 2021 those tax cuts would turn into hikes for households making between $10,000 and $30,000. By 2027, after individual tax cuts in the bill expire, households making up to $75,000 a year would wind up paying more, while those making $1 million and up would get roughly a third of the overall tax benefit. Households making between $20,000 and $30,000 in 2017 would see a 25.4 percent increase in their tax bill compared to current law.

Like what you see? Sign up for our free newsletter.

The benefits for high-income earners persist thanks to changes in business taxes in the Senate’s plan, which calls for corporate tax cuts to be permanent while having individual tax cuts expire. Republicans say future Congresses aren’t likely to let those individual tax cuts expire.

The 2021 tax increases on Americans making $30,000 or less appears to be the result of Senate Republicans’ decision to include a repeal of the Affordable Care Act’s mandate requiring individuals to buy health insurance or pay a penalty. Without the mandate, millions of lower-income Americans are expected to forego buying health insurance, which would mean they no longer get federal tax credits to subsidize the cost of their plans.

The JCT scored the loss of those subsidy payments to insurers as a tax hike, leading to pushback from Senate Finance Committee Chairman Orrin Hatch and other Republicans. "Did we take away their money? No," Sen. Mike Crapo (R-ID), according to The Washington Post. "There's not one dollar taken away from them if they make that choice [not to buy insurance]." 

Senate Tax Bill Income Effects