- The Joint Committee on Taxation released a new analysis of the Senate Republican tax bill on Thursday.
- The analysis showed that in 2019, households of all incomes would get a tax cut.
- By 2027, however, all households making $US75,000 and under would see a tax increase — and half of the tax cut benefits would go to people making $US1 million and over.
A new analysis by the Joint Committee on Taxation shows that the Senate GOP tax bill would cut taxes across the board in the short-term but prompt tax increases for lower- and middle-class households down the road.
The JCT, which acts as an official congressional scorekeeper, released its updated distributional analysis for the Tax Cuts and Jobs Act as written by Sen. Orrin Hatch, the chair of the Senate Finance Committee.
For Republicans, the good news comes the the short-term. According to the JCT, every income group would see a significant tax cut in 2019. The average household making $US75,000 to $US100,000 would save $US21,482.
But that would change in later years, the analysis shows.
By 2021, the average household making between $US10,000 to $US30,000 annually would see a tax increase, while just over half of the bill’s tax benefits would go to people making more than $US200,000 a year.
The discrepancy would get even more stark by 2027, with all households making under $US75,000 a year getting a tax increase on average compared to the current system. Also in that year, roughly half of the tax bill’s benefits would go to people making more than $US1 million.
The tax increase would come primarily because the cuts to the individual tax rates in the TCJA would expire after 2025, shifting everyone back to the current bracket structure. Other technical changes, like shifting the bracket growth to chained consumer price index from regular consumer price index, would eventually lead to a the tax increase compared ot current law.
Republicans would argue that the individual bracket adjustments would eventually be reauthorized by a future Congress, similar to the cuts under George W. Bush, but the bill as it stands does not include those extensions.
Possibly complicating matters, the JCT analysis does not include any benefits incurred from the changes to the estate tax — nor does it account for the full impact of the Obamacare individual mandate repeal that is included in the TCJA.
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