ITEP Statement: Partial House Tax Bill Doubles Down on Trickle Down
news releaseContact: Jon Whiten ([email protected])
House Republicans have released some of the text of the tax bill they hope to begin moving this coming week. While much remains to be seen and many details still need to be added, the portion released on Friday begins to paint a clear picture of who this bill will prioritize, how, and at what cost.
Statement from Amy Hanauer, Executive Director of the Institute on Taxation and Economic Policy:
“So far this costly bill appears to double down on trickle down, with huge tax cuts that will further enrich the rich and not much for the rest of us. What’s more, many of the modest improvements for lower- and middle-income families are proposed to be temporary, whereas the benefits for the wealthiest are proposed to be permanent”
Among the major changes:
- The 2017 changes to personal income tax rates and brackets would be made permanent. These rate and bracket changes would result in a tax cut for some people in all income groups, but nearly two-thirds of the benefits would go to the richest fifth of taxpayers, and more than a quarter would go to the richest 1 percent.
- The deduction for income individuals receive from “pass-through” businesses would be made permanent and increased from 20 to 22 percent. Proponents of this subsidy sometimes characterize it as a break for “small” businesses but most of the benefits go to the richest 1 percent.
- The exemption for the estate tax would increase to $15 million per spouse from $13.99 million per spouse and continue to increase with inflation. The reach of this tax is already at historic lows. In 2019, for example, only 8 of every 10,000 people who died left an estate large enough to trigger the tax.
- The Child Tax Credit would temporarily increase to $2,500 per child from $2,000 per child for four years, but 4.5 million citizen kids would lose access to the credit CTC due to a requirement that both their parents have Social Security numbers.
- The very generous version of a tax break for offshore profits (the GILTI deduction) would be made permanent, effectively taxing the foreign profits of American corporations half as much (at most) as their domestic profits are taxed. This is a tax break compared to the original 2017 tax law, which scheduled a less generous version of this provision to come into effect in 2026.
- The 2017 change to the standard deduction would be made permanent, and a temporary four-year boost would bump it up to $16,000 for individuals, $24,000 for taxpayers filing as head of household, and $32,000 for married couples.