Sen. Rick Scott’s (R-Florida) plan to force every American to owe income tax in his recently released platform for the Republican Party would raise taxes by over $1,000 for the bottom 40 percent of income earners, a new analysis found.
In a Report released on Monday, the Institute on Taxation and Economic Policy (ITEP) estimated that the poorest Americans would be the most affected by Scott’s plan — meaning that the GOP’s tax plan would essentially be to tax the poor.
The lowest 20% of Americans, earning $12,300 per year, would owe $1,050 more in federal tax, or 9 percent of their income. ITEP found that the next 20 percent, with an average income of $34,700, would owe $13,390 more, or 4 per cent of their income. On average, the middle 20 percent of Americans would owe $500 more. The top 5 percent would owe $0 more.
Scott’s outline says that he wants to make sure all Americans pay some income tax in order “to have skin in the game.”
“Currently over half of Americans pay no income tax,” Scott wrote. Indeed, large portion of Americans don’t owe federal income taxes. Many don’t owe taxes because they simply don’t make enough income to qualify. People with disabilities, retirees and other Social Security beneficiaries don’t owe taxes because much of the program is tax-exempt.
Some people don’t owe federal income taxes because they receive tax credits; because of programs like the Earned Income Tax Credit and the Child Tax Credit, many Americans have a negative tax burden.
ITEP calculated these estimates by assuming that Scott’s plan would make it so that all Americans owed at least $1 in taxes, taking credits into account. So, if a household had an income tax liability of $1,000, and would normally have received a credit of $1,500 from the Internal Revenue Service (IRS), they would not receive their expected $500 tax refund under Scott’s plan, ITEP wrote.
The report found that the plan would most affect the poorest states. More than 50 percent of Mississippi residents would be affected by a tax hike, with other Southern states, such as West Virginia and Arkansas, Louisiana, Alabama, closely following suit.
If Scott’s plan were passed, and carried out in the way that ITEP interpreted, it would have a devastating impact on the people in the country who are most in need.
According to the Federal Reserve, about 36 percent of Americans said in 2020 that they would have difficulty paying for an emergency expense of $400, with 12 percent saying that they wouldn’t be able to. This statistic is similar to the previous years, despite that COVID relief, extra unemployment insurance, and expanded child tax credit helped lower financial worries even for those who were laid off during pandemics.
A recent survey showedA large proportion of Americans would struggle to pay an emergency $1,000 bill. A majority of respondents to the survey stated that they would need to take steps such as cutting back on expenses, borrowing money, or charging a credit line to pay the bill.
Scott’s tax plan reflects Republicans’ stubborn opposition to raising taxes on the wealthy and corporations. Some of the world’s richest people, like Jeff Bezos and Elon Musk, regularly owe $0or a small amount in taxes. GOP lawmakers have worked to keep the tax rates low for the wealthiest Americans. Reduce fundingto the IRS so they can continue to dodge taxes.
