A Middle-Class Tax Cut? It Depends Who and Where You Are
“You add all of this up and I am taking a hit,” he said. “I don’t know if it is a drastic hit, but I am coming out behind, not ahead.”
His property tax and mortgage interest combined total $24,000 a year, while he estimates his state income tax would total another $10,000, for a total of $34,000 in itemized deductions. But under the new tax system, he would probably take only the standard deduction, which is $24,000 for a married couple filing jointly.
Taxpayers across the country were making similar calculations this week. Most analysts agreed that the tax bill would cut taxes for the middle class on average, but would raise them on millions of families. A New York Times analysis this week found that the original version of the House plan would raise taxes on nearly half of middle-class families by 2026. Other independent estimates likewise showed that a significant minority of middle-income taxpayers would pay more under the House plan than they would under current law.
That conclusion posed a political problem for Republicans, who have repeatedly promised a middle-class tax cut. Some Republicans, including Senator Marco Rubio of Florida, criticized the House bill for doing too little to benefit families. The Senate majority leader, Mitch McConnell, promised over the weekend that “nobody in the middle class is going to pay more” under the Senate plan.
The Senate bill — the full text of which was released Thursday — probably falls short of that promise. But some economists said the bill would most likely be better for the middle class on average than the House bill.
The Senate version keeps most of the provisions of the House bill that would have helped middle-class families, such as the doubling of the standard deduction, and would make others, such as the child tax credit, more generous. It would also preserve some tax breaks that the House bill initially would have eliminated, including a deduction for medical expenses and a tax credit for families who adopt children. Some of those provisions, including the adoption credit, had been restored by the House Ways and Means Committee, which approved a revised version of the bill on Thursday.
Still, the tax cuts in the Senate bill would probably be modest for most middle-class families, especially compared with the far larger tax breaks for businesses and some high-income individuals.