House Republicans have tried to dance around the fact that their tax bill would ultimately lead to large hikes for much of the middle class, resorting to awkward rhetorical contortions whenever confronted over the issue in interviews. But avoiding the topic is about to become a lot harder, thanks to an unflattering new report by Congress’s own nonpartisan Joint Committee on Taxation, which spells out just how many ordinary families could face significant increases in what they owe the Internal Revenue Service under the GOP’s legislation.
In 2019, the first year of the JCT’s analysis, 58.2 percent of households1 would receive a meaningful tax cut, while 8.3 percent would face a hike. But those numbers start to look worse in future years, thanks in part to the expiration of a key credit for families and changes to how the tax code is adjusted for inflation. By 2027, fewer than half of Americans would have a tax cut worth $100 or more, while about 1 in 5 would receive a hike that large, compared with current law.
Yes, more Americans will get tax cuts than hikes, but many of the families facing tax increases fall squarely in the middle class, which speaks poorly for a bill that Republicans have marketed aggressively as middle-class tax relief. Among households making $75,000 to $100,000, for instance, 18.3 percent would see a tax hike of at least $500 in 2027. Among those earning $40,000 to $50,000, about 11.7 percent would get a hike. (The JCT’s figures are all adjusted for inflation, so we’re talking 2017 dollars.)
Here’s what that means in hard numbers, courtesy of Bobby Kogan, a Democratic Senate Budget Committee aide who has been tweeting his calculations: By 2027, 20 million households making less than $200,000 would face a tax hike of at least $500. Meanwhile, 100 million households would either see a tax hike or a tax cut of less than $100 by that year.*
So why will taxes rise for so many Americans under the GOP plan? There are several reasons. The legislation would cap or eliminate deductions for state and local taxes and mortgage interest, which are particularly popular among upper-middle-class and wealthy households in coastal blue states. Largely for tactical budget purposes, the bill also eliminates a $300 tax credit for families as of 2023, which would drive up taxes on many middle and low-income families. The legislation also changes the tax code’s inflation measure, which among other things means some people will find themselves bumped into higher tax brackets faster than under current law.
All of this is widely known. But the JCT’s analysis—which was prepared at the request of House Democrats—poses a particular political problem for Republicans. First, the committee is Congress’s in-house scorekeeper on tax matters, playing a role similar to the better known Congressional Budget Office. GOP leaders have tried to dismiss findings by outside think tanks as flawed or politically motivated. But they’ll have a much harder time waving away JCT’s findings, since they’re relying on them to measure their bill’s effects on the deficit.
Second, the report directly contradicts some of the GOP leadership’s talking points. Republicans have been arguing that other analyses showing that their plan would hike taxes on the middle class are flawed, essentially because they take the bill at face value and assume the $300 family credit will expire when it’s scheduled to in 2023. This, they claim, will never actually happen, because the sunset provision is essentially just a budget gimmick to keep the bill within the deficit limits Congress imposed on itself. Future Congresses will surely renew the credit, they promise. “It will never go away,” House Ways and Means Chairman Kevin Brady, the bill’s lead author, recently said.
This is a bad argument on its face. The Republican-led Congress has repeatedly shown itself incapable of smoothly accomplishing basic tasks like reauthorizing the Children Health Insurance Program or keeping the government funded. It’s foolish to assume that the family credit will be quietly renewed before it expires; even if it is, some enterprising member of Congress could use it for leverage to get cuts elsewhere that could hurt low- or middle-income families.
But beyond all that, the JCT’s analysis shows that even if the break gets renewed, millions of families would still face a hike. The family credit is only worth $300 per adult, or $600 for a typical married couple, and isn’t set to grow with inflation. Meanwhile, 10 years from now, one-fifth of Americans are scheduled to see a tax hike of $500 or more in inflation-adjusted dollars, which will be more equivalent to $600 in nominal dollars by late 2020s. Keeping the credit around won’t be enough to stop their taxes from going up.
The Republicans have written a bill that cuts taxes on corporations and wealthy business owners and pays for it partly by raising them for a substantial minority of the middle class. There is no other way to view this. The closer you look the numbers, the more their excuses fall apart.
1Technically, the JCT figures are broken “tax units,” meaning individual filers or a married couples who submit their taxes jointly. Some households do have more than one tax unit—say, cohabitants.
*Correction, Nov. 13, 2017: Based on a misreading of the JCT’s tables, this post incorrectly stated that the average household making $20,000 to $30,000 would receive $687 from the House Republican bill’s business tax cuts. The correct number is approximately $32. As a result, I have removed a paragraph suggesting that the JCT’s figures may understate the number of people who will actually see a hike on their returns.