By now, the conversation about the tax cut is a familiar one: Is it the biggest revenue source?
Or is it the best way to reduce the national debt?
As a result, the debate about how much to cut has become a common topic in Washington, as well as in state capitals across the country.
On Wednesday, the nonpartisan Tax Policy Center released a report titled The Biggest Tax Cut in America: How Much Will It Raise?
The Tax Foundation’s Kevin Hassett explains.
(The Washington Post)The Tax Policy Foundation’s (TPC) report, which will be presented at a White House meeting Thursday, analyzed how much revenue the tax cuts will generate over a period of years.
The group found that the $1.5 trillion in tax cuts that lawmakers approved in 2016 will provide nearly $900 billion in revenue over a decade.
That’s enough to cover about 70 percent of the federal government’s budget over the next decade.
The rest of the revenue comes from lower income Americans, who will get a boost in taxes due to the tax plan’s provisions for child tax credits and the extension of the child tax credit.
“The Tax Foundation estimates that tax cuts to low- and moderate-income households will raise $1,000 a year over the first decade of the plan’s lifecycle, with the average household income going up by $2,500 a year,” the Tax Foundation report said.
“The average income for households in the top one percent of earners will increase by $1.,000, and households in those top one-percenters will gain $2.5 million in total.”
In contrast, the average income of households in middle-income families will decline by $300, a decline that is smaller than the average decline in income from any other group of taxpayers.
“For the first two decades of the tax bill’s life cycle, the Tax Policy Institute found, the typical household income of the top 10 percent will rise by $3,700, compared with a $1 million loss in the bottom 20 percent of households.
For the bottom 50 percent, the losses are more than twice as large as the gains.”
This is not to say that the Tax Reform Act will have a huge effect on the size of the national budget. “
These provisions make it more expensive for lower-income earners to make ends meet, and they can also make it harder for middle-class households to pay their bills.”
This is not to say that the Tax Reform Act will have a huge effect on the size of the national budget.
The Tax Policy Act would only raise taxes on the wealthiest Americans, not everyone in the country will pay the same amount in taxes.
But it’s a good starting point for understanding the tax code, according to Hassett.
“These are big gains for the top 1 percent,” Hassett said.
“[They] go far beyond the tax breaks and deductions the tax system provides for low- income people.”
And this is why tax reform will likely become more important as the year goes on, he added.
“With a big tax cut like this, you want to get a lot of people out of poverty, and that means the tax break for the rich has to be much bigger than what it’s for the rest of us,” Hasset said.
But even though the Tax Bill’s cuts to the rich are huge, Hassett added, it’s not the whole story.
The Tax Bill is only the first step in a much longer process of tax reform.
President Trump has promised to repeal and replace the Affordable Care Act, and he has repeatedly said that the plan would raise taxes for the wealthy.
In addition, Hasset and the Tax Center found that a major tax break is still missing from the tax law.
The group noted that the bill only provides $3 billion in tax relief for the wealthiest households.
The plan also does not provide an extension of child tax benefits, which are extended for two years.
That means the average family earning $70,000 would see a tax increase of $3.25, but only $600, or $2 less than the $3 a year they would have paid in taxes under the ACA.
“So, the top end of the income distribution is going to be getting a big boost, but the middle class and people in the middle of the spectrum will get nothing, and there’s no extension of those child tax provisions,” Hassitt said.
“And the bottom end of income distribution has been left out, too, so it’s very clear that the tax change is very much intended to be for the richest Americans and not the middle and lower-middle classes.”
But the Taxpayers Protection Alliance, a progressive group, argues that the biggest impact of the bill will come from middle- and lower income earners.
“For the middle-and-lower-income groups, the biggest