Muftic: GOP tax plan: Middle class draws short straw
Gideon John Tucker in 1866, as Surrogate of New York, wrote in a decision: “No man’s life, liberty or property are safe while the Legislature is in session.”
If you are in the middle class, this is especially true this year. Tax reform currently being considered in Congress with the GOP leaders’ goal of passing tax reform before Thanksgiving. The GOP proposed a plan that would likely put some money in some middle class pockets and but then they take some out of other pockets by closing middle class tax loopholes, credits, and deductions. Recent legislative action set deficit and tax cut totals, but the operative details are what we get Nov. 1.
These GOP bills containing specifics have been kept secret until November 1, but the GOP has been floating proposals. If they are included in their bill, the Tax Policy Center estimates individual taxes would increase by $470 billion over the next decade. Taxes on business will be reduced by $2.6 trillion and taxes on estate and gift taxes will be reduced by $200 billion. $1.5 trillion dollars will be added to the deficit, already permitted in a recently passed resolution. That same budget resolution allows GOP tax bills to be passed in the Senate by 51 votes, not 60.
True, individuals will get to claim double their current standard individual deductions , and get some relief for LLC pass through. However, be prepared to withhold more from your paychecks. The GOP wants to tax employer provided health insurance as personal income . Your ability to invest in your 401K and defer taxation until retirement would be reduced from $18,000 per year to $2,400. If you do not file the standard deduction, but itemize, you would no longer be able to deduct state and local taxes anymore. The poorer have benefited by earned income tax credits and others with child related tax credits, but those may left in the dust, too. Mercifully your mortgage and charity giving will not be affected.
Would tax cuts to the wealthy and corporations organically trickle down to the middle class in the form of more jobs and higher wages instead of going to shareholders? Nothing proposed by the GOP requires that to happen. Whether you believe it will is a matter of faith since it has rarely happened in the past . Thanks to loopholes, corporations do not pay full taxes now anyway, so that lowering their rate from 35 percent to 20 percent per the GOP proposes lowers it close to the effective rate they are paying now. The projected deficit of $1.5 trillion is to be covered by a projected growth rate stimulated by the tax cuts, but that is considered unrealistic by many and when it has happened, circumstances are different than now.
Some of the financial harm to the middle class is outside of the tax bill or related to the recently passed resolution . Your health premiums will rise by 20 percent due to Trump’s recent executive order sabotaging Obamacare. The CHIP children health care program serving 9 million low and middle income kids was not renewed. Thirty-two states will run out of money within the next six months, including Colorado. The budget resolution recently passed by the House and Senate permits $1.5 trillion cuts in Medicaid and Medicare over the next ten years.
For more, visit http://www.mufticforumblog.blogspot.com.
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