The House GOP released a tax bill it claims will benefit middle and working-class Americans. The bill will double the standard deduction, a change that will reduce the tax burden faced by middle- and lower-income families while also increasing the size of the child tax credit, according to the New York Times. In addition, the bill does not reduce the deductibility of 401(k) payments, despite reports suggesting otherwise.
Seniors groups have come out in opposition due to the elimination of the deduction currently allowed for medical expenses. Though not widely used, the deduction largely benefits older, sicker, middle-class Americans. The AARP has condemned the measure, referring to it as a “health tax.”
The bill would also increase the taxes of some middle-class Americans, according to the Washington Post. The average family in the lower middle class, making between $20,000 and $40,000, and those in the upper middle class, making between $200,000 and $500,000, would pay more under the plan after 2023, according to the Congressional Joint Committee on Taxation. This increase results from allowing tax breaks for middle-class families to expire, including state and local income tax deductions. A New York Times analysis suggests that many in the middle class will face thousands of dollars in tax increases as soon as 2018.
Lily Batchelder, a former member of President Barack Obama’s National Economic Council, told the Washington Post that the plan benefits richer Americans. For example, the elimination of the estate tax contributes to a far greater after-tax income bump for the rich in comparison to middle-class Americans by 2027.
Though the Republicans maintain a majority in the House and Senate, opposition from right-leaning members of Congress means that passage of the bill is far from guaranteed. The New York Times analysis speculates that Republicans in high-tax states, fiscally conservative Republicans, and pro-business special interests may scuttle the bill. Business groups also claim that the bill would harm multinational corporations. Senator Ted Cruz (R-TX) has criticized the apparent tax increases in the text of the bill.
President Donald Trump has sought to expand support for the bill by reaching out to Democrats in conservative states, such as North Dakota, by claiming the bill harms the rich, though few senators seem persuaded by this line of argument.
The bill may be subject to a 60-vote supermajority threshold, making the bill’s future uncertain. For the moment, Republicans retain control of the legislature and the presidency.