A new analysis shows that conservative Democrats’ tax reform plan will give a large tax cut to a majority of the country’s millionaires — despite the conservatives’ insistence that the reconciliation bill cost the government as little revenue as possible.
The analysisFrom the Tax Policy Center shows thatAbout two-thirds would receive a net tax cut under the reconciliation plan for people earning more than $1 million per year, which is an average of about $16,800In tax cuts. A total of $8,500 per annum will be available to tax cuts for those earning between $500,000-$1 million per year.
This is due to the increase in the state and local taxes (SALT), deduction cap that conservative Democrats such as Representatives Josh Gottheimer (New Jersey), and Tom Suozzi, (New York), recently pushed into the Build Back better Act. The lawmakers have been insistent that the increase — which raises the amount that taxpayers can deduct based on state and local taxes from their federal taxes to $80,000 — would benefit the middle class.
The Tax Policy Center, however, finds no such thing. “Despite what its promoters say, raising the cap to $80,000 would provide almost no benefit for middle-income households,” wrote the Tax Policy Center’s Howard Gleckman. The analysis shows that these households would only see tax savings of $20 for 2021.
Similar results were also found in other analyses of the SALT cap rise. The Committee for a Responsible Federal Budget, (CRFB). wrote earlier this weekA household with a household income of more than $1,000,000 a year would receive ten-times more money from the SALT Increase than middle-class families would get from the bill’s child tax credit expansion.
But Gottheimer, and Suozzi, have been persistently fighting for the SALT increase. hinging their support of the reconciliation billIts inclusion. They wanted to completely repeal the cap and rejected a plan submitted by Senator Bernie Sanders (I-Vermont). Only for the purpose of repealing the capPeople who earn less than $400,000 annually.
Instead, as a supposed compromise, the current proposal lifts the cap from $10,000 to $80,000 — allowing some wealthy taxpayers to pay even less in taxes than the already -low rates given to them by Donald Trump and Republicans in 2017.
An analysis by CRFBThis week, it was found that the SALT cap proposal would result a lower tax collection over the long-term, even though it would be reverted to $10,000 in 2027. It would cost $285 billion during the five years it would be increased, the analysis finds — and in the meantime, the bill would add $200 billion to the deficit overall. An earlier analysis of a plan for raising the cap to $72,500 revealed that it would be costly. one of the costliestParts of the reconciliation bill
It’s ironic that the cap increase would cost the government revenue. Conservative Democrats like Suozzi or Gottheimer insist on the SALT cap rise while also threateningIf the Congressional Budget Office (CBO), finds that reconciliation bill would increase the deficit, they will withhold their votes. Notably, the CBO frequently shown bias against progressive policies.
The inclusion of the cap increase reveals conservative Democrats’ real priorities for the reconciliation bill. Sen. Joe Manchin (D. West Virginia) has complained for months about critical ClimateProposals and child care suggestions like the Child tax credit. Continue on and onHe has no complaints about deficit but did not object to the SALT deduction cap increase that would primarily be beneficial to the wealthy.