House Republicans Unveil 2018 Tax Plans
Unlike with Barack Obama’s massive change to the nation’s health care system, Republicans aren’t abiding by the “we have to pass the bill so we can find out what’s in it” strategy when it comes to the first comprehensive tax reform effort since the 1980s.
House Republicans unveiled the long-awaited tax bill earlier today, the Tax Cuts and Jobs Act, which should help in debunking many of the liberal lies surrounding the package. For the middle class, the bill preserves current tax write-offs for 401(k)s and IRAs, lowers middle class tax rates, but trims deductions for state and local taxes. The deductability of local property taxes is capped at $10,000, while the deduction for state income taxes is eliminated. Many conservatives have argued that this would put fiscal pressure on many tax-and-spend liberal states, as an absence of tax deductability automatically increases the net tax burden of everyone living in that state, even if rates stay the same. Higher earners will be hit the hardest by the lack of tax deductability, as they pay the majority of the nation’s property taxes, and face higher marginal tax rates.
The top individual tax bracket of 39.6 percent is left in place.
Among the other features include:
- Lowering individual tax rates for low- and middle-income Americans to Zero, 12%, 25%, and 35%; keeps tax rate for those making over $1 million at 39.6%
- Increasing the standard deduction from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples.
- Establishing a new Family Credit, which includes expanding the Child Tax Credit from $1,000 to $1,600
- Preserving the Child and Dependent Care Tax Credit
- Preserving the Earned Income Tax Credit
- Preserving the home mortgage interest deduction for existing mortgages and maintains the home mortgage interest deduction for newly purchased homes up to $500,000, half the current $1,000,000
- Continuing to allow people to write off the cost of state and local property taxes up to $10,000
- Repealing the Alternative Minimum Tax
- Lowering the corporate tax rate to 20% – down from 35%
- Reducing the tax rate on business income to no more than 25%
- Establishing strong safeguards to distinguish between individual wage income and “pass-through” business income
- Allowing businesses to immediately write off the full cost of new equipment
- Retaining the low-income housing tax credit
And yet there are still Democrats in Congress blasting this as “tax cuts for the rich.” Here are just a few select quotes:
“On average, middle class families earning less than $86,000 would see a tax increase under the Republican ‘tax reform’ plan.”
— Sen. Kamala Harris (D-Calif.), in a tweet, Oct. 27
“The average tax increase on families nationwide earning up to $86,100 would be $794.00”
— Sen. Robert P. Casey Jr. (D-Pa.), in a tweet, Oct. 24
“Under GOP plan, U.S. families making ~$86k see avg tax increase of $794.”
— Sen. Jeff Merkley (D-Ore.), in a tweet, Oct. 24
And guess what? They’re dead wrong. Even the Washington Post’s factcheckers gave the claim “Four Pinocchios” for accuracy, noting that they “traced the talking point to a document put out by the Democratic Policy and Communications Committee, essentially the communications arm of Senate Democrats. That document laid out a series of statistics, tailored for each individual state, that purported to show how damaging the evolving Republican tax plan would be for middle-class Americans.”
More from the report: “That document had this line on each state page: ‘The average tax increase on families nationwide earning up to $86,100 would be $794, a significant burden for middle-class families.’ This factoid in turn was sourced to a report by Democrats on the Joint Economic Committee. So we tracked that down. That report had this line: ‘If enacted, the Republican tax reform proposal would saddle 8 million households that earn up to $86,100 with an average tax increase of $794 — a substantial expense for working families.'”
Here’s the kicker: “Note the difference. The original report referred to 8 million households receiving a $794 tax increase. Somehow, when it got communicated down the line, that nuance was lost and it was translated into a talking point referring to all working-class families.”
The Democrats lied about how many middle class families would be seeing a tax hike. I wonder what else they’re lying about when it comes to this tax package.
We reported previously, in addition to cutting rates, the President’s Council of Economic Advisors recently released a report showing that updating the U.S. business tax code to compete with other countries around the world could boost workers’ wages by $4,000, and as much as $9,000 a year.
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