November 16, 2021
The middle class sees fleeting benefits while others face a tax hike “No tax on income below $ 400,000” pledge has been blown
Washington, DC – New analysis by the impartial Joint Committee on Taxation (JCT) of the latest version of the Democrats’ Ruthless Tax and Spend Act (HR 5376) confirms that it grants tax cuts to the rich; offers temporary and limited tax breaks for low and middle earners; and violates the president’s promise not to levy taxes on anyone with an income less than $ 400,000.
“This analysis proves that any assumption that this bill represents a large-scale tax cut for the middle class is clearly wrong,” said US Senator Mike Crapo (R-Idaho), senior member of the Senate Finance Committee. “The analysis also documents that the government’s promise that ‘no one with an income of less than $ 400,000 will see taxes increase’ is not true. Budget gimmicks used in the bill create a structure that essentially favors deficit-financed tax breaks in the first year and pours gas on a currently accelerating inflationary fire. Moreover, efforts to extend tax breaks in the coming years, without disclosing what additional new tax hikes would pay to dramatically worsen our debt crisis and lead to longer-term inflationary pressures, promise. ”
Because the bill is based on a number of gimmicks to hide the real cost of the Democratic persistence of politics, there is not a single year in which all tax laws are fully effective at the same time. But even in the first year when the biggest relief goes into effect, less than a third of low- or middle-income taxpayers would get a significant tax break, while nearly 90 percent of those who earn between $ 500,000 and $ 1 million a year would receive it experienced a significant tax cut.
From the analysis:
- Less than a third of those who earn between $ 20,000 and $ 100,000 will receive a significant tax cut of more than $ 500.
- More than two-thirds of those who make $ 1 million or more and nearly 90 percent of those who make between $ 500,000 and $ 1 million will receive a significant tax cut.
In 2023, almost all lower and middle class tax breaks will be gone.
- For example, only 3.5 percent of those who earn between $ 50,000 and $ 75,000 will get some kind of tax cut (up from more than 30 percent for 2022), while more than 12 percent will get a tax increase (up from less than 0.15 percent for 2022). ).
- More than 45 percent of those who earn $ 1 million or more will continue to receive a significant tax cut, as will two-thirds of those who earn between $ 500,000 and $ 1 million, with less than a third receiving a tax increase in this category .
- Even in the final year of the bill – when the state and local tax break (SALT) for the rich is technically gone – the rate of millionaires and those who earn more than $ 500,000 will receive significant tax cuts will be three times that the taxpayer in any other income bracket between $ 30,000 and $ 200,000.
The phase-in and phase-outs not only obscure the true distributional effects, but the footnotes in the analysis suggest that families with lower incomes are even more affected and that the rich benefit even more.
- The analysis does not take into account the impact of the reintroduction of the Superfund tax or the $ 8.7 billion tax increase on nicotine. JCT has separately confirmed that both tax increases will increase the tax liability of taxpayers earning less than $ 400,000, and JCT has confirmed that tobacco tax distribution is very regressive.
- The distributional effects of the credit for the purchase of an electric vehicle and the credit for the purchase of an electric bicycle are not taken into account in this analysis. It is expected that these provisions will also benefit those in the higher income brackets.