Middle Class Would Find Higher Taxes Under Republican Plan

The Congressional Research Service released a report last month reviewing the Republicans proposed tax reform plan that would broaden the tax base, and what they found was that under their proposal the net result would be cutting taxes on the wealthiest Americans while raising taxes on the middle and lower class. The report was actually prepared by Democrats and they then sent their findings to be reviewed by nonpartisan tax experts including The Tax Policy Center. I have noticed this has received very little attention so I wanted to share some their findings.   

Under the GOP plan, they would replace the current tax structure with a two bracket system (otherwise known as a flat tax) — 25% and 10% — cutting the top tax rate from the current 35% to 25%. This would benefit everyone and result in a reduction of federal tax collection by $4.5 trillion dollars. Now on its face it sounds great, the middle class would pay a 10% flat tax rate. 

Here is the catch — Republicans including their golden boy Paul Ryan want to get rid of special interest tax loopholes and tax shelters. 

The Republicans have declined to specify the exact loopholes they would target, but what we do know is, based on their record, they are united in opposing ending any subsidies for industries such as oil and gas. 

The study found that the biggest loopholes that are currently in the system consist of tax breaks for employer-provided health insurance, mortgage interest, state and local taxes, and retirement savings, and these all disproportionately benefit the middle class. 

According to the Joint Economic Committee, “although households earning $100,000 to $200,000 a year would save about $7,000 from the lower tax rates in the GOP plan, those savings would be swamped by eliminating major deductions.” 

This would result in married couples falling in that income range would pay an additional $2,700 annually to the IRS, on top of the tax increases Bush tax cuts that are set to expire at the end of the year. Households earning more than $1 million a year would get a tax cut of about $300,000 annually (multi-millionaires would receive a huge tax break) while people making under $200,000 will see their taxes rise

Roberton Williams of the Tax Policy Center has reviewed the Committee’s report and he says:

That even though the numbers are rough its conclusions are largely accurate. Even with eliminating fairly major tax preferences, the Ryan tax plan remains regressive. That’s the bottom line. Unless you go after the tax preferences that benefit the wealthy, i.e., capital gains, dividends, tax-free interest on municipal bonds, it’s really hard to undo the regressivity of the rate changes. You’ll be shifting the burden of the tax code toward the middle class

I guess there is a reason why whenever Mitt Romney and his fellow Republicans are asked to give specifics on their flat-tax plan, they refuse and then go to their usual talking points, i.e., we need to broaden the base, let everyone have skin in the game…my favorite….we can’t raise taxes on the job creators, etc. This is yet another example that shows who Republicans are working for…the rich.

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4 responses to “Middle Class Would Find Higher Taxes Under Republican Plan

  1. Reblogged this on The ObamaCrat.Com™ and commented:
    Good information we all need to know. Thank you The Blue States.

  2. Reblogged this on cadesertvoice and commented:
    Middle Class Would Find Higher Taxes Under Republican Plan
    In other words, we will pay to keep the rich on welfare from government subsidies and tax loopholes. The rich don’t bring jobs, working middle class people who spend create demand, thus employers hire more employees to meet the demand. Thus, it is the middle class who create jobs, which is what the Democrats have been saying all along, and has been proven with the surplus of Clinton.

    • Thank you for the reblog!! I absolutely agree with you…the only way to improve our economy and create jobs is to put more money in the middle/lower class to spend and that will spur the economy. Tax cuts for wealthy will not do anything to spur economic growth…the only effect it will have is adding to their wealth.

  3. I am a long time conservative and I am embarrassed to say I ever was a republican. This is very sad because republicans were not like this back when Reagan and the Bush’s were president.
    Even though I love guns and freedom, I now have to look at the democratic party to protect us in the middle class. Very sad.
    I will not vote republican anymore, that is for sure.

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