Lies, damned lies and democrat math....
How to Invent A Middle-Class Tax Hike
A case study in how Washington math distorts reality.
Sen. Pat Toomey speaks during the mark up of the Senate's tax reform bill in Washington, Nov. 16. PHOTO: BILL CLARK/CONGRESSIONAL QUARTERLY/NEWSCOM VIA ZUMA PRESS
By
The Editorial Board
Updated Nov. 16, 2017 6:47 p.m. ET
194 COMMENTS
By now readers have been inundated with competing claims about the GOP tax bill, and if we are to believe the reports: Taxes are going up for the poor, the middle class, grandma, and anyone whose last name is not Rockefeller. For an object lesson in the perversity of Beltway budget legerdemain, consider a Thursday exchange at the Senate Finance Committee.
At the committee’s tax markup, Senator Ron Wyden of Oregon railed that middle-class families “get clobbered” by the GOP tax plan. Mr. Wyden referred to a Thursday report from the Joint Committee on Taxation, whose distribution tables purport to show tax increases over a decade for many Americans who earn less than $75,000.
These 10-year tables are generally useless because Joint Tax projects tax increases after the cuts for individuals expire after 2025. Yet the political reality is that Congress will inevitably extend them. But in some earlier years Joint Tax shows tax increases. For example: In 2023 the average tax rate for folks earning $20,000 to $30,000 would increase to 4.2% from 3.7% under present law, or so the budget lords say.
Recall that the Senate bill repeals the ObamaCare penalty on folks who decline to buy health insurance. This “saves” money under the Senate’s bonkers budget rules. Joint Tax assumes the following:
Some folks may choose not to buy ObamaCare, though the plans and relevant subsidies will still be available. As a result of all this human freedom, some taxpayers may not claim the Affordable Care Act’s tax credits. Presto! A Republican tax increase on the poor and middle class.
Senator Pat Toomey of Pennsylvania exposed this logic: “Let’s imagine somebody qualifies for unemployment insurance” but chooses not to sign up. Then they wouldn’t receive unemployment benefits. “Did that person just get a tax increase?”
The answer is so obvious that only intelligent people could get it wrong. Mr. Toomey produced a poster of a Joint Tax table for 2023 that excludes the mandate, and what do you know: An entirely different story. The table shows tax decreases across the board, including deep cuts for lower and middle income families. The average rate for $20,000 to $30,000 falls to 3.4% from 3.7%.
The Congressional Budget Office and Joint Tax have always made dubious assumptions that are designed to make it harder to cut taxes, but here Joint Tax manages to detract from the sum of human knowledge. As for our readers, our best advice is to tune out this noise.
How to Invent A Middle-Class Tax Hike
A case study in how Washington math distorts reality.
Sen. Pat Toomey speaks during the mark up of the Senate's tax reform bill in Washington, Nov. 16. PHOTO: BILL CLARK/CONGRESSIONAL QUARTERLY/NEWSCOM VIA ZUMA PRESS
By
The Editorial Board
Updated Nov. 16, 2017 6:47 p.m. ET
194 COMMENTS
By now readers have been inundated with competing claims about the GOP tax bill, and if we are to believe the reports: Taxes are going up for the poor, the middle class, grandma, and anyone whose last name is not Rockefeller. For an object lesson in the perversity of Beltway budget legerdemain, consider a Thursday exchange at the Senate Finance Committee.
At the committee’s tax markup, Senator Ron Wyden of Oregon railed that middle-class families “get clobbered” by the GOP tax plan. Mr. Wyden referred to a Thursday report from the Joint Committee on Taxation, whose distribution tables purport to show tax increases over a decade for many Americans who earn less than $75,000.
These 10-year tables are generally useless because Joint Tax projects tax increases after the cuts for individuals expire after 2025. Yet the political reality is that Congress will inevitably extend them. But in some earlier years Joint Tax shows tax increases. For example: In 2023 the average tax rate for folks earning $20,000 to $30,000 would increase to 4.2% from 3.7% under present law, or so the budget lords say.
Recall that the Senate bill repeals the ObamaCare penalty on folks who decline to buy health insurance. This “saves” money under the Senate’s bonkers budget rules. Joint Tax assumes the following:
Some folks may choose not to buy ObamaCare, though the plans and relevant subsidies will still be available. As a result of all this human freedom, some taxpayers may not claim the Affordable Care Act’s tax credits. Presto! A Republican tax increase on the poor and middle class.
Senator Pat Toomey of Pennsylvania exposed this logic: “Let’s imagine somebody qualifies for unemployment insurance” but chooses not to sign up. Then they wouldn’t receive unemployment benefits. “Did that person just get a tax increase?”
The answer is so obvious that only intelligent people could get it wrong. Mr. Toomey produced a poster of a Joint Tax table for 2023 that excludes the mandate, and what do you know: An entirely different story. The table shows tax decreases across the board, including deep cuts for lower and middle income families. The average rate for $20,000 to $30,000 falls to 3.4% from 3.7%.
The Congressional Budget Office and Joint Tax have always made dubious assumptions that are designed to make it harder to cut taxes, but here Joint Tax manages to detract from the sum of human knowledge. As for our readers, our best advice is to tune out this noise.
