Republican Tax Plan May Offer Little to Middle Class and Americans Might Not Notice Their Small Gains

Republican tax plan
iStock.com/gustavofrazao

As the Republican tax plan continues to be controversial even after it has passed, history has shown that the relatively small tax break that many analysts believe the middle class will receive won’t even be noticed.

The chief example of Americans not realizing their taxes had been reduced goes back to the 2009 economic-stimulus bill passed under former president Barack Obama and containing a one-year tax break worth $800.00 for married couples in 95% of working households. That amounted to about $15.00 a week.

A poll in February 2010, however, found that just 12% of respondents said their taxes had been reduced. Over half said that they saw no change, and 24% believed that their taxes increased.

The current Republican tax plan may also suffer the same fate due to its relatively small middle-class benefit, as estimated by a number of analysts. The plan would deliver about an $800.00 cut on average, according to the Congress’s Joint Committee on Taxation.

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Other estimates put the savings at closer to $1,200 per household in 2019, but that still only amounts to about $23.00 a week.

Meanwhile, corporations are going to see massive savings as the corporate tax rate is slashed from 35% to 20%, although now there is some leeway for Republicans to push that figure up to 22% in service of giving more benefits to the middle class.

The cuts also come at a time when Congress is fighting tooth-and-nail to emerge victorious in the approaching mid-term elections. The tax bill is the only signature Trump administration legislative victory since President Donald Trump’s inauguration. If the benefits aren’t felt to be significant, that may cost Republican seats and delay future policies by the administration.

Perhaps most troubling for supporters of the Republican tax plan is that only about 22% of Americans believe that their taxes will go down when the bill is passed, while 41% believe they’ll rise, according to a CBS News poll released Thursday. Even Republicans are doubtful; only 31% expected to see a tax cut under the plan.

With many studies and economists saying that the biggest beneficiaries of the tax bill will be the rich and corporations, if the bill cannot gain traction among voters come mid-term elections, then the Trump administration may find itself staring down a majority Democrat Senate for the remainder of his first term, certain to dampen his aspirations on everything from the construction of the border wall to healthcare reform.

 

Source

The Middle Class Might Not Even Notice If the GOP Cuts Their Taxes,” Bloomberg, December 11, 2017.

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Categories: Economic Report, News

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