US tax analysts predict 2027 tax rises

THE TOP 1 PERCENT::The US tax bill is expected to pass the Senate today, which would see those earning more than US$733,000 annually get tax cuts of US$51,140 next year


Wed, Dec 20, 2017 - Page 10

The US Republican tax bill would mean average initial tax cuts for Americans across all income lines, but by 2027, it would boost average levies for everyone earning up to US$75,000, which includes most taxpayers, Congress’ nonpartisan tax analyst said on Monday.

The projection seemed unlikely to have any impact on the fate of the legislation, which was expected to win House approval yesterday.

Senate passage is likely by today as the Republican party races to send US President Donald Trump his first major legislative victory before Christmas.

The Joint Committee on Taxation calculated that in 2019, people earning between US$20,000 and US$50,000 would see tax cuts averaging 10 percent or more. Those making between US$200,000 and US$1 million would see reductions averaging slightly less.

However, by 2023, people making less than US$30,000 would see tax increases, while those earning more would see their tax cuts get smaller.

That pattern would continue. In 2027, a year after most individual tax provisions expire, people making up to US$75,000 would be paying more on average than under current law.

The committee said about 118 million of the 177 million tax returns are from households making up to US$75,000.

Republicans ended the individual tax cuts in 2026 to conform to Senate rules that require the measure to limit the federal debt increases it would cause. The bill is projected to boost federal shortfalls by about US$1.5 trillion over the coming decade.

Republican lawmakers said they would expect a future Congress to continue the tax cuts so they would not expire. If achieved, that would drive up deficits even further.

A separate study by the US Tax Policy Center, a private nonpartisan group, found that individual taxes would be reduced on average next year by US$1,600, but that ranged on average from US$60 for people earning less than US$25,000, and US$7,640 for those earning more than US$149,000.

Those in the top 1 percent, earning more than US$733,000, would see average tax cuts of US$51,140.

In 2027, 53 percent of families could face tax increases averaging US$180. Those tax boosts on average would grow with income, the policy center said.

One in four taxpayers that year would have tax reductions averaging US$1,540, with larger cuts for higher-earning people.

Most of the bill’s benefits go to businesses and the wealthy, which Republicans said would goose the economy and benefit all.

Democrats reject that assertion and are expected to oppose the bill unanimously.

On Monday, US Senator Susan Collins said she would support the bill, meaning all voting Republicans are expected to back it, enough for passage.

SU Senator John McCain is at home battling brain cancer and is expected to miss the vote.

Republicans control the Senate 52 to 48.