House GOP Passes Tax Reform 2.0
The new legislation would make last year's tax cuts permanent, and Democrats are screaming.
With everyone’s attention seemingly focused on the circus surrounding Brett Kavanaugh’s confirmation, GOP House members were busy passing Tax Reform 2.0. On Friday, House Republicans, joined by three Democrats, passed the bill by a vote of 220-191. The legislation, should it pass the Senate (which will be a tall order), makes permanent the tax cuts established by last year’s Tax Cuts and Jobs Act.
As usual, Democrats came out complaining that the legislation favored the rich. House Minority Leader Nancy Pelosi (D-CA) lamented, “The GOP’s priorities have been laid bare. How can we milk the public, exploit the taxpayer by adding to the wealth of the wealthiest 1%?” Ironically, it has been Democrats who are most guilty in seeking to carve out tax breaks for the wealthy. In the high-tax states that are almost exclusively Democrat controlled, their biggest objection to Republican tax reform is that it reduces the amount of state and local taxes (SALT) deductible on a federal tax return. As we previously noted, Democrats are out to protect their rich constituents from the effects of higher state and local taxes they themselves have created.
Democrats are not really “for the people.”
So who has gained the most from the GOP’s tax reform? The short answer: The Forgotten Man — middle-class and low-income workers toiling to make their lives better. As Grover Norquist and Alex Hendrie recently noted in The Hill, “Thanks to [tax reform], 90 percent of wage earners are seeing higher take-home pay. A family of four earning the median annual income $73,000 per year will see a 58 percent reduction in federal taxes, while a single parent with one child earning $41,000 will see a 73 percent reduction in federal taxes.”
And Tax Reform 2.0 does more to add to the middle- and low-income workers’ gains. As the Joint Economic Committee report highlights:
- Taxpayers with incomes under $50,000 will see their share of the total federal tax burden drop from 4.2% to 3.9%.
- Those with less than $10,000 in income will see their taxes slashed by more than half.
- Average taxpayers with incomes between $10,000 and $20,000, a group that frequently claims refundable tax credits, will have no tax liability and receive an additional refund.
- Millionaires will actually see their share of the total federal tax burden rise to 20.2%, compared to 19.6% if tax relief expires.
- While taxpayers will enjoy an average 5.2% cut in their taxes, taxpayers that earn over $1 million will see a below-average reduction of 2.3%.
Republicans need to be banging this drum all the way to the midterms.