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JCT: Millions of Households Face Tax Increase or No Tax Benefit Under Republican Tax Bill

December 19, 2017 at 5:30 PM

Millions of households would face tax increases or get little from the tax bill that the House and Senate are soon expected to pass — even before most of its individual income tax provisions would sunset in 2025, new Joint Committee on Taxation (JCT) estimates show. That’s in stark contrast to claims from GOP leaders that their tax bill “would directly benefit all Americans,” and would not raise taxes for any filers in the middle class. Indeed, the bill would raise taxes on millions of households in every year – with that number growing over time, as the visualization shows, and as we explain below.

 

In 2025, when all the bill’s individual income tax provisions are in place, about 81 million households with incomes below $200,000 — or roughly 47 percent of households with incomes at that level — would either lose or would gain little from the final bill (see first table):

  • 22.2 million households with incomes below $200,000 would face tax increases, including 14.4 million facing tax increases of more than $500 apiece.
  • 58.4 million households with incomes below $200,000 would face tax changes (increases or cuts) of less than $100 apiece.

Meanwhile, about 64 percent of millionaire households would get a tax cut.

TABLE 1
Number of Households Facing Tax Increases, Little or No Change, and Tax Cuts Under Final GOP Tax Bill
2025, millions of filers
  Tax increase a Minimal tax change b Tax cut a Total filers in income category
Income All >$500 All >$500
Less than $10,000 0.17 0.06 18.20 0.69 0.06 19.03
$10,000 to $20,000 1.90 1.01 11.42 7.34 1.26 20.68
$20,000 to $30,000 2.31 1.55 11.09 8.78 3.06 22.18
$30,000 to $40,000 1.87 1.18 6.67 7.43 3.14 15.95
$40,000 to $50,000 1.95 1.16 4.06 8.00 5.45 14.00
$50,000 to $75,000 4.46 2.70 4.60 19.37 15.05 28.40
$75,000 to $100,000 3.22 2.07 1.39 14.45 11.69 19.03
$100,000 to $200,000 6.36 4.70 1.01 25.28 23.06 32.62
$200,000 to $500,000 1.88 1.56 0.18 7.70 7.33 9.77
$500,000 to $1,000,000 0.22 0.21 0.01 0.98 0.97 1.21
$1,000,000 and over 0.22 0.21 0.00 0.39 0.39 0.61
Total, All Taxpayers 24.40 16.33 58.53 100.37 71.38 183.49
Addendum:
Less than $100,000 15.87 9.74 57.42 66.05 39.71 139.28
Less than $200,000 22.23 14.44 58.43 91.34 62.77 171.90

Source: JCTD-17-58

a Tax increase or cut is more than $100.

b Tax change is less than $100. Note: these estimates do not incorporate the effect of estate tax cuts. Totals may not add due to rounding.

In 2027, the picture gets even worse because at the end of 2025, almost all of the bill’s individual income tax provisions – including all of its individual income tax cuts – would expire. About 144.7 million households with incomes below $200,000 — or roughly 83 percent of households with incomes at that level — would either lose or would gain little from the final bill (see second table):

  • 35.1 million households with incomes below $200,000 would face tax increases, including 9.5 million facing tax increases of more than $500 apiece.
  • 109.7 million households with incomes below $200,000 would face tax changes of less than $100 apiece.

But 61 percent of millionaire households would continue to get a tax cut.

TABLE 2
Number of Households Facing Tax Increases, Little or No Change, and Tax Cuts Under Final GOP Tax Bill
2027, millions of filers
  Tax increase a Minimal tax change b Tax cut a Total filers in income category
Income All >$500 All >$500
Less than $10,000 0.38 0.04 18.34 0.27 0.06 18.99
$10,000 to $20,000 4.83 0.79 14.86 0.67 0.39 20.38
$20,000 to $30,000 5.02 1.15 16.20 1.28 0.76 22.50
$30,000 to $40,000 3.40 1.02 11.29 1.58 0.80 16.26
$40,000 to $50,000 3.05 0.95 9.42 1.90 0.89 14.37
$50,000 to $75,000 6.19 1.89 17.62 4.84 1.72 28.65
$75,000 to $100,000 3.72 1.09 10.56 5.20 1.73 19.49
$100,000 to $200,000 8.50 2.57 11.37 13.47 5.40 33.33
$200,000 to $500,000 3.35 1.61 1.52 5.05 3.25 9.92
$500,000 to $1,000,000 0.40 0.31 0.05 0.76 0.66 1.22
$1,000,000 and over 0.24 0.23 0.01 0.38 0.37 0.63
Total, All Taxpayers 39.19 11.70 111.25 35.29 15.97 185.73
Addendum:
Less than $100,000 26.58 6.94 98.29 15.74 6.35 140.63
Less than $200,000 35.08 9.50 109.65 29.21 11.75 173.96

Source: Joint Committee on Taxation Table D-17-58

a Tax increase or cut is more than $100.

b Tax change is less than $100. Note: these estimates do not incorporate the effect of estate tax cuts. Totals may not add due to rounding.

While many low- and middle-income households would be left even worse off at the end of 2025, the final Republican tax bill’s deep corporate rate cuts would stay in place permanently. To pay for those corporate rate cuts, the bill uses a slower measure of inflation for adjusting tax brackets and other tax provisions each year, which raises taxes across the board (by, for instance, gradually pushing middle-income filers into higher tax brackets).

Also to pay for the corporate tax cuts, the bill retains the Senate bill’s repeal of the Affordable Care Act’s individual mandate, the requirement that most people get health insurance or pay a penalty. All of the savings from repeal ($53 billion in 2027, for example) would come because fewer people would be insured, which would lower federal costs for Medicaid and for tax credits that help people buy insurance. The JCT estimates include the revenue savings (mainly from lower tax credits), but not the savings from lower Medicaid coverage or other spending effects.

As we’ve previously explained, congressional Republicans didn’t make the bill worse for working and middle-income families due to budget rules, as they’ve suggested they were forced to do, but instead as a result of a series of choices they made to prioritize profitable corporations over those households.

Even these figures don’t show the full picture for most Americans. The bill adds at least $1.5 trillion to deficits over the next ten years through its tax cuts that are skewed to the wealthy. Key congressional Republicans are already saying they will seek to offset their tax cuts next year by cutting an array of programs that serve low- and middle-income families, such as food assistance and possibly health care. If that were to happen, the same low- and middle-income families that see little initial benefit — or even face tax increases — from the bill would bear much of the burden in the form of cuts in programs on which they rely, while high-income households would likely remain large net winners.

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