WASHINGTON – If you’re a middle class family with even one child, the Republican tax plan as it currently stands could well raise your taxes.
Because despite all the statements from President Donald Trump and other Republican congressional leaders that the plan cuts taxes for typical American families, the few details of the plan released to date actually show the opposite.
By eliminating one tax deduction of $4,050 per person, and replacing it with an increase of $11,300 per family in a separate deduction, a married couple raising a single child loses $850 of deductions – likely meaning an approximate $100 tax increase. A second child would likely mean a tax increase of about $600.
White House officials and GOP proponents have promised that the eventual plan will result in a tax cut for those families – a “historic” tax cut, according to Trump. But as of yet, that’s all it is: a promise, even as the plan spells out a tax rate cut for the richest Americans and a dramatic slashing of business taxes.
Those paying the maximum 39.6 percent rate on their individual taxes would see that fall to 35 percent. Large corporations would see their maximum rate fall from 35 percent to 20 percent. Smaller businesses that “pass through” their profits directly to their owners would see their maximum rate fall from 39.6 percent down to 25 percent.
Why not provide that level of specificity to middle-income taxpayers?
“I can only attribute it to a lack of experience in doing a communications rollout,” said Rick Tyler, a Republican political consultant who worked for Texas Sen. Ted Cruz in the 2016 presidential primaries. A plan like that should be “understandable, believable and repeatable,” Tyler added.
A White House official on Tuesday told HuffPost on condition of anonymity that the administration is working with congressional tax-writing committees to make sure the eventual plan increases the child tax credit “to ensure middle income families are getting much needed tax relief.”
Even if that occurs, however, Tyler said Republicans will have trouble getting the public to believe them because of Trump’s willingness to say so many false things – including how much he stands to gain personally from his tax proposal.
The cut to so-called “pass through” businesses could amount to a savings of $75.7 million per year for Trump personally, based on the income he reported earning last year on his recent financial disclosure form. Despite this, Trump claimed that he would not be helped at all from his own tax plan.
“It’s a compulsion he has. He can’t help it,” Tyler said. “Whenever you’re rolling out a proposal, you have to have a certain level of credibility, and this administration doesn’t have any.”
Republicans nevertheless continue to praise the plan as a great windfall for the typical taxpayer. Vice President Mike Pence, during visits to Detroit and Milwaukee last week, repeatedly touted the proposal’s near doubling of the existing “standard deduction” from $12,700 to $24,000 for married couples. But he never addressed the elimination of the $4,050-per-person “exemption” that makes the proposal a wash or a net loser for most families.
“You’re asking them to do math. Cut it out. No math,” laughed Stan Collender, a former Capitol Hill staffer who spent years working for both House and Senate budget committees. “They’re at best misleading on this stuff. It would be one thing if it made substantive sense, but it doesn’t.”
An analysis by the independent Tax Policy Center showed that Trump’s plan would provide a modest tax cut of about 1.2 percent for most middle-class families. But that projection incorporated an assumption that the plan would wind up increasing the current tax credit of $1,000 per child to $1,500 per child, based on what House Republicans had talked about in 2016.
If the credit is not increased that much, and the $4,050-per-person “personal exemption” is eliminated, that modest tax cut could turn into no tax cut at all for those families, or even a slight tax increase.
Because Republicans intend to pass the tax plan without Democratic votes, they need to first pass a 2018 budget resolution that asks for one. Once that is done, they can pass it through the Senate with just 50 votes, in a chamber where they hold 52 of the 100 seats, and with Pence available to break any ties.
House leaders plan for a vote on their version of the budget this week, with the goal of putting a final tax plan on Trump’s desk for his signature by the end of December.
Collender, for one, does not believe that is remotely possible, and points to months of work by the so-called “Big Six” – two of Trump’s economic advisers, Senate Majority Leader Mitch McConnell, House Speaker Paul Ryan, and the chairs of the two tax-writing committees – that produced just a bare outline of a plan.
“It took six people six months to come up with general principles,” he said. “And they’re going to pass this in two months?”