The GOP says only 'rich people' will get a tax increase from their bill - but millions of middle-class Americans could pay more
- GOP lawmakers claim that their tax bill will only increase taxes on "rich people in Manhattan and San Francisco."
- An analysis by the Tax Policy Center shows that's not exactly true.
- Close to 8.5 million people will get a tax increase in 2018, and 4.6 middle income people could see a tax hike by 2025.
After a wild seven-week push, Republicans passed their massive tax bill on Wednesday and set into motion a massive sea change in the US economy.
So, what does it mean for your taxes? Here's the bottom line: Analyses have shown the tax bill will cut the average American's taxes and cut taxes on average for households at every income level. But some clear winners and losers will emerge from the tax code overhaul, especially as time goes on.
Republicans have acknowledged that taxes will increase on some people, but Republican lawmakers claim these increases will only happen to a select few wealthy Americans.
"The only people whose taxes are going up are the really rich," GOP Sen. Ted Cruz said on the Senate floor Wednesday. "Every taxpayer, their taxes are going down, except rich people in Manhattan and San Francisco, some of them, their taxes may go up."
According to an analysis by the Tax Policy, this is not the case. Millions of middle-income earners could eventually see their taxes increase under the GOP tax bill.
(Before diving into the numbers, it's important to note: Most analyses look at the number of tax units that will be affected. A unit does not line up with a single person, but rather a single tax filing. So a married couple filing jointly is one unit, representing two people. If someone has three dependents, they are all on one tax unit.)
According to the TPC analysis of the final GOP tax bill:
- 4.8% of tax units will see an increase in their taxes in 2018.
- Based on the number of units in the US from the Joint Committee on Taxation (JCT), just under 8.5 million units will see their tax increase next year.
The number is also higher for middle-income earners. According to the TPC:
- 7.3% of all people in the middle income quintile - those that make between $48,600 and $86,100 - will see their tax bill increase.
- While the JCT's income groups don't align perfectly with the TPC's numbers, a rough estimate shows that between 2.75 million and 3 million middle-income units would see an increase.
These numbers would grow in later years. In 2025, for example:
- 8.9% of Americans would get an increase, or 16.3 million tax units.
- For middle income people, 10.9% of units would get an increase - roughly 4.6 million units.
The number of people seeing tax increases would soar in 2026 and 2027 because individual tax cuts contained in the bill are temporary, and the rates would snap back to their current levels after 2025. That would result in 53.4% of all units getting a tax increase in 2027.
Republicans argue that a future Congress will extend the personal cuts, pointing to the extensions of the Bush tax cuts under President Barack Obama.