Plug in your salary to visualize the impact that proposed tax cuts will have on you vs. the ultra-wealthy.
It’s being widely reported: As soon as this week our elected representatives are passing legislation to greatly enrich a tiny minority of already extremely wealthy citizens, paid for by completely ignoring the vast majority. All this while selling their plan as a middle-class tax cut.
There are literally hundreds of moving parts here and the House and Senate are currently still hashing out separate proposals which will need to be reconciled before the bill becomes law. That said, we already know both bills will have similar impacts on American households. The truth is though, with all the moving pieces it's becoming impossible to make sense of any of this without truly running the cold, hard numbers.
Need more reasons to hate this bill?
- The Senate plan will throw about 13 million people off health insurance by repealing the individual mandate. According to the best estimates available, this will lead to an increase in preventable deaths on the order of 15,600 people per year. For those who choose to keep their health insurance, premiums will also rise by an estimated 10%.
- The House plan will end deductions for medical expenses--A tax break given only to those whose medical expenses are high enough to exceed 10% of their yearly income. An estimated one million people who already have exceptionally high annual medical expenses will lose this deduction.
The bill makes Republican priorities clear as daylight:
- The Senate bill will end ALL individual tax breaks in 8 years - only corporations get a permanent tax break.
- The House bill replaces dependent exemptions with 2 disappearing acts: $300 Family Flexibilty Credit will END after 5 years. The $600 Child Tax Credit will slowly erode (not inflation indexed).
- Beyond this, a new technique for computing inflation, 'chained CPI', is included by design to raise tax bracket cut-offs more slowly over time – disproportionately raising taxation on middle income Americans.
Despite taking out a 1.5 trillion dollar loan to finance tax breaks, both plans are notably ungenerous to the poor and elderly.
- A hugely valuable 5k tax credit for older Americans (65+) and the disabled, who are lower and middle income would be completely removed from the tax code.
- Despite early rumors to the contrary, House and Senate proposals have both chosen not to extend 'refundable' tax breaks to the bottom 35% of Americans who simple don't earn enough money to owe federal taxes. This effectively excludes over a third of the country from receiving any benefit.
Some of the most controversial changes appear to take generally take aim at states on the coasts which tend to elect politicians from the party not currently controlling Congress:
- Removal of State and Local tax deduction, which disproportionately benefits those in high state tax locales, many of which happen to be left leaning (notably CA, NJ, NY). House plan currently limits this deduction. Senate plan does away with it entirely.
- Slashing of Home Mortgage Interest Deduction (House Plan), again disproportionately affecting these same left leaning areas due to much higher average home prices in the coastal metro areas.
A provision passed by the House will hit many PhD and other graduate students with an extra $10,000+ annual bill by taxing them on the tuition waivers they receive to attend school. (In exchange for teaching and research duties many students receive tuition waivers.) These students never actually see this money, it goes directly toward tuition and has not been taxed until now.
As much as 35% of corporate tax cuts (70 billion a year) will actually flow to wealthy foreign investors (benefiting from slashed corporate tax rates), not Americans, rich or poor.
According to economic projections, after the 1.5 trillion is paid for:
- Eighty percent of the tax cuts would go to the top 1 percent of households.
- The bottom 80 percent of Americans would get just 13 percent of the tax cuts.
- Every income group in the bottom 95 percent of the income spectrum would be net losers, on average, while only the top 5 percent would be net winners.
“Most of the benefits as best I can tell will go to wealthy people. The idea that you’re going to get a huge spur to growth is delusional.” – Lawrence Summers, former Treasury Secretary & President of Harvard University
“My donors are basically saying, ‘Get it done or don’t ever call me again.'” Rep. Chris Collins (R-NY)