How a $2.9 trillion tax cut for the wealthy would affect you
Tax cuts are a key part of the GOP tax overhaul plan that was passed last week.
While the legislation does have some tax breaks, including a tax credit for business owners who make up to $10 million, it also raises a new round of tax on the middle class.
As a result, the average household will see a $1,300 tax increase on their taxes under the bill, according to the nonpartisan Tax Policy Center.
In fact, the Tax Policy Centre estimates that the tax cut would only pay for itself in two years.
“We believe the bill would add $2,900 to the average tax bill over the next 10 years, on average,” said Roberton Williams, the director of Tax Policy and Government Affairs at the center.
And if you live in a state that isn’t on the bill yet, you could pay $1 million more in taxes, according a report released Monday.
Read moreThe Tax Policy center estimates that under the plan, a middle-class household would pay $4,600 more in income taxes over the decade.
But the nonpartisan Joint Committee on Taxation estimated that a middle class family of four with an annual income of $80,000 would pay just $1.50 more in federal taxes under this plan.
And even if the middle-income earners who earn between $50,000 and $75,000 in the plan would see a bigger tax hike, that increase would only be temporary, as the tax cuts would expire.
“The biggest impact would be a tax cut of $800 to $1 for the top one percent of taxpayers, with a $500 cut for all income groups,” Roberton said.
That’s because the middle and top 1 percent of the U.S. population would pay more under the GOP plan than they do under current law, but their income would still fall under current tax rates, according the Tax Foundation.
“That’s because a tax increase is permanent, and because the tax base will grow with time,” Robert said.
The nonpartisan Tax Foundation, which provides analysis for lawmakers, also said that the plan will lead to an increase in the federal debt.
It’s also expected to have a significant impact on the nation’s economic recovery, since it would cut $3.3 trillion from the economy over the course of the decade, the nonpartisan think tank said.
The nonpartisan Tax Policies Center also predicted that the bill will result in more Americans going without health insurance and lower wages for the average worker.
“A tax cut on the wealthy, especially if they have a large business or an inherited business, could result in a decrease in health coverage and lower wage growth,” Roberty said.
Read moreThe Joint Committee of Taxation says that if you’re making between $200,000 to $300,000 a year, your tax burden would fall between 2.7% and 4.1%, depending on your income level.
And the Tax Policies Foundation estimates that if the bill is passed, it would raise your taxes by $1 trillion over the first 10 years.
But that’s not all.
The Tax Policy Institute estimates that a household earning between $100,000-125,000 annually would pay an additional $1 to $2 billion in taxes over that time period.
Read MoreThe Tax Foundation’s Roberton, however, said that those tax increases would be temporary and would only make up a small part of your total taxes, because the bill increases your taxes at a rate of 3.4%.
“The plan raises your taxes on the wealthiest taxpayers while lowering your taxes for everyone else,” Robertor said.
But not everyone is as optimistic about the impact of the bill on their tax bill.
“My wife and I are not thrilled about the changes.
We were not expecting any major changes in the tax code and have been paying our taxes for over 40 years,” said Ann Tappas, a retired business executive.
“I have to pay my taxes at an annual rate of about $100.”
Read moreAccording to Roberton and Ann Toppas, if the House passes the tax plan, it will only increase your taxes, not lower them.
They say the tax changes will only be permanent, meaning that the rate of increases will not go down as they age.
But Ann Topsas says that it will be hard to afford the tax increase.
“It’s going to hurt my family financially,” Ann said.
Read MoreRead moreRead moreTax policy experts are not the only ones who are concerned about the tax bills.
The House Ways and Means Committee is scheduled to hold a hearing on Tuesday to review the bill.
Rep. Chris Van Hollen (D-MD) said the hearing will discuss the bill’s impact on middle class families.
“What I have heard over and over again is that families are struggling and families are hurting.
The majority of our constituents do not live in poverty.
They do not have health care