Tax cuts in Senate bill would evaporate in a decade: JCT

Tax cuts in Senate bill would evaporate in a decade: JCT
© Greg Nash

Tax cuts for individuals in the Senate’s latest tax plan would disappear by 2027, according to an analysis by the Joint Committee on Taxation (JCT), with some even seeing a tax increase.

While taxpayers would see their tax bills drop by 7.4 percent on average in 2019 under the bill, by 2027, their taxes would rise by an average of 0.2 percent.

The poor would be hardest hit, with those making between $20,000 and $30,000 seeing their tax bills rise starting in 2021. By 2027, they would see a 25.4 percent increase in their tax bill.


Those making over $75,000 would still see their taxes go down, albeit by less than 1 percent by the final year, while everyone making under $75,000 would see some level of tax increase.

The drop-off is likely attributable to a series of expiring tax cuts introduced in Finance Committee Chairman Orrin HatchOrrin Grant HatchKey Republicans say Biden can break Washington gridlock Trump awards Medal of Freedom to racing industry icon Roger Penske Trump holds more Medal of Freedom ceremonies than predecessors but awards fewer medals MORE’s (R-Utah) latest update to the bill. The legislation would also eliminate the individual mandate for ObamaCare and lower some individual tax rates.

The JCT analysis looked at averages for each income group and did not break out how many people at each level would see their taxes go up or down.

Hatch said that the sharp tax increase on low-income families found by the analysis was the result of the individual mandate being repealed. Without the mandate, millions of people are expected to go without health insurance.

“JCT began with an assumption that some people in the lower income brackets will opt to not purchase health insurance and thus not take advantage of available tax credit subsidies. Without those credits, they see an overall uptick in their tax liability,” Hatch said at the opening of Thursday’s finance committee markup of the tax bill. 

Low-income people would retain the option of accessing those subsidies if they chose to buy health insurance, he added. The JCT simply reflected the assumption that many would choose not to.


“Obviously, we have no intention of raising taxes on these families,” he added.

Republican senators at Thursday's markup generally agreed that the numbers reflected fewer people receiving ObamaCare subsidies, which take the form of tax credits, when the individual mandate is removed. 

"This is absolutely not a tax increase and you guys know that," said Sen. Pat ToomeyPatrick (Pat) Joseph ToomeyNSA improperly collected US phone records in October, new documents show Overnight Defense: Pick for South Korean envoy splits with Trump on nuclear threat | McCain blasts move to suspend Korean military exercises | White House defends Trump salute of North Korean general WH backpedals on Trump's 'due process' remark on guns MORE (R-Pa.), responding to Democrats touting the analysis. 

"We won’t send a payment to the insurance company, it has no effect on them," he added. 

But Democrats seized on the projected tax increases for low- and middle-income people.

"Middle income families will actually see their taxes go up, not down," said Sen. Ben CardinBenjamin (Ben) Louis CardinThe Secure Act makes critical reforms to our retirement system — let's pass it this year Lawmakers honor JFK on 56th anniversary of his death Senate Democrats ask Pompeo to recuse himself from Ukraine matters MORE (D-Md.).

"Anyone who says that we’re hiking taxes on low-income families is misstating the facts," Hatch responded. "Anyone who says people will see their taxes go up because we’re taking away their health insurance is also misstating the facts."   

- This story was updated at 12:41 p.m.