The last time Congress passed tax reform was more than 30 years ago. Back then, a Democratic Congress and Republican president spent two years crafting a plan that would give virtually everyone a significant tax cut and fix an outdated system. The plan passed with bipartisan support.
This year, Republicans are trying to jam through a plan that will raise taxes on the poorest Americans while giving massive tax cuts to the wealthiest. The tax cuts for individuals will expire in the middle of the next decade while the cuts for corporations stay permanent. So, if you make your money from wages, it’s not a very good deal. If you make your money from stock dividends, you’ll do great.
In North Carolina, about 1.2 million people will see their taxes increase, according to the Institute on Taxation and Economic Policy. For these people, the higher taxes would likely wipe out any of the meager savings they may have gained from the tax reform passed by the North Carolina legislature. Those folks can confidently say that Republicans raised their taxes.
North Carolina Republicans claimed their tax reform would help everyone but the bulk of the benefits went to the rich. In North Carolina, under the state current tax plan, a family making $50,000 a year saves about $1,000 more in income tax than they paid before the GOP overhaul. However, much of that is offset by the increased sales tax on services like car repairs. In contrast, a family making $250,000 a year saves about $5,000 and they don’t own cars that need lots of repairs. They do, however, use accountants and lawyers to help them pay less taxes, but those services aren’t taxed.
Likewise, the tax plan that Republicans in Congress are pushing would benefit the wealthiest at the expense of the rest of us. The richest 1%, people making more than $607,000 per year, would see an average tax cut of more than $37,000 in 2019. The middle 20% of earners, those making between $42,000 and $67,000, would see a tax cut of $730, or about $60 a month.
The GOP Congressional tax plans are little more than cuts, not reform. They will disproportionately benefit the wealthy at the expense of the rest of us. They will add $1.5 trillion to the debt, passing the buck to the next generation. Finally, the GOP has long deluded itself into thinking tax cuts will pay themselves with accelerated economic growth. It’s never happened and it won’t this time. If they want real reform, they should start over and look for ways to put money into the pockets of middle class families who will spend the money on goods and services that create economic growth.