Senate Plan Could Increase Taxes on Some Middle-Class Workers
Both the House and Senate bills would cut the corporate tax rate to 20 percent from 35 percent and provide business tax benefits, such as the ability to immediately expense purchases of equipment.
The Times analysis, using the open-source software TaxBrain, found that roughly one-quarter of families in the middle class would see their taxes increase in 2018, by about $1,000 on average. By 2026, the share seeing an increase would rise slightly, to about one-third, and the average increase would rise to about $1,600. For the majority of middle-class families that receive a tax cut, the average savings would be about $1,300 in 2018 and $1,700 in 2026.
The Times analysis defines the middle class broadly as those earning between two-thirds and twice the median household income, or about $50,000 to $160,000 per year for a family of three. To focus on families, the analysis excluded individual filers and households headed by people 65 or older and is adjusted for the size of each household.
Under the House bill, The Times has found, about half of middle-class families would pay more in taxes in 2026.
The analysis did not seek to calculate how workers might benefit from a steep cut in the corporate tax rate, which both the Senate and House bills would reduce to 20 percent from a top rate of 35 percent today, or project how the bills might increase economic growth and, with it, Americans’ wages.
On Friday, the independent Tax Foundation released an analysis of the plan’s growth effects. It projected that the Senate bill would increase gross domestic product by 3.7 percent over the next decade and raise wages by 2.9 percent across the economy.
For taxpayers earning more than $1 million a year, the Senate bill offers a more limited upside and downside than the House bill.