- The Tax Policy Center released an analysis on Monday of the Tax Cuts and Jobs Act.
- The report found that the bulk of the benefits from the GOP tax bill would go toward wealthier Americans.
- The report also found that by 2027, 28% of Americans would see their taxes increase, relative to current law.
Editor’s Note: Following the Tax Policy Center’s publication of the analysis, the group retracted the analysis due to an error. The TPC is correcting the analysis following the retraction.
A report published Monday found that if enacted, the Republican tax bill, the Tax Cuts and Jobs Act, would lead to higher taxes for many Americans in 10 years.
The new analysis from the Urban Institute and Brookings Institution’s Tax Policy Center found that by 2027, 28% of Americans would see an increase in their tax burden due to the tax-code overhaul proposed in the bill.
According to the TPC, the expiration of several provisions designed to ease the burden on individuals would lead to an increase for many taxpayers over 10 years.
“Overall, the tax cut would be smaller in 2027, because of the expiration of certain provisions in 2023 (including the new $US300 family credit and 100 per cent bonus depreciation), the effect of indexing tax parameters to a slower-growing measure of inflation, and the substitution of a child credit that is not indexed for inflation for personal exemptions that are indexed,” the report said.
In the short term, all income groups would pay less on average than under current law — but certain proposed changes would lead to an increase in the tax burden for 12% of the population in 2018, the TPC found.
Here’s a rundown of some of the other key findings from the TPC:
- The average American’s tax bill would decline by $US1,100, increasing the average after-tax income by 1.5%.
- Taxes for people in the lower two quintiles would decrease by between 0.3% and 0.5%. People in the middle quintile, those making $US48,000 to $US86,000, would see an average cut of $US700, or 1.2% of their after-tax income.
- Taxpayers with incomes in the top 1% would receive 22% of total tax cuts — with an average cut of $US37,000.
- The report said that “70 per cent of taxpayers would experience a tax cut from the included provisions averaging $US2,000, and 12 per cent would face an average tax increase of nearly $US1,600.”
- The average American’s tax bill would decline by $US700, increasing after-tax incomes by 0.7%.
- Taxes for people in the lower two quintiles would increase slightly, with an average increase of $US10 to $US20.
- Taxpayers with incomes in the top 1% would receive “nearly 50 per cent” of the overall benefit, with an average cut of $US52,780.
- “In 2027, 57 per cent of taxpayers would see an average tax cut of $US2,400, while nearly 28 per cent of taxpayers would face an average tax increase of nearly $US2,000,” the report said.
- Some high-income earners would see a tax increase due to the loss of itemized deductions.
Republicans argued that it didn’t factor in potential economic growth from the plan. A separate analysis from the Tax Foundation found that the legislation would favour wealthier Americans in a static scenario but distribute similar benefits when adjusting for economic growth.
The TPC told Business Insider that an analysis factoring in dynamic growth effects was forthcoming.
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