The GOP tax “reform” framework calls for massive cuts for taxpayers with a lot of income and corporations. The framework doesn’t spell out what increases the GOP is proposing or whether the framework will be revenue neutral. But here is what the Tax Policy Center found
The Tax Policy Center has produced preliminary estimates of the potential impact proposals included in the “Unified Framework for Fixing our Broken Tax Code.” We find they would reduce federal revenue by $2.4 trillion over ten years and $3.2 trillion over the second decade (not including any dynamic feedback). In 2018, all income groups would see their average taxes fall, but some taxpayers in each group would face tax increases. Those with the very highest incomes would receive the biggest tax cuts. The tax cuts are smaller as a percentage of income in 2027, and taxpayers in the 80th to 95th income percentiles would, on average, experience a tax increase. (link)
In order to eliminate the inheritance tax, reduce corporate income taxes, preserve the tax loophole hedge fund managers use to get the lowest tax rate possible (carried forward interest treatment on their earnings), the framework already makes the middle class- and especially the upper middle class- pay more.
Because those 47% that don’t pay taxes now can’t fund these tax breaks for the wealthy. In fact the framework includes more refundable tax credits, creating larger deficits.
Here is a list of occupations that earn between $100,000 and $200,000 listed by the median income of workers in these job types.
These are the types of workers who will most likely see their taxes increase
- Physician $180,000
- Lawyer: $144,500
- R&D Manager: $142,120
- Software development manager: $132,000
- Pharmacy manager: $130,000
- Strategy manager: $130,000
- Software architect: $128,250
- Integrated circuit designer engineer: $127,500
- IT manager: $120,000
- Solutions architect: $120,000
- Engagement manager: $120,000
- Applications development manager: $120,000
- Pharmacist: $118,000
- Systems architect: $116.920
- Finance manager: $115,000
- Data scientist: $115,000
- Risk manager: $115,000
- Creative director: $115,000
- Actuary: $115,000
- Data architect: $113,000
- Tax manager: $110,000
- Product manager: $107,000
- Design manager: $106,500
- Analytics manager: $106,000
- Information systems manager: $106,000
It’s math people. The wealthy and corporate managers who benefit from increased corporate profits demand tax cuts as the consideration for their political donations. They especially want to eliminate the inheritance tax as that deters family dynasties. The GOP tea party types will not let deficits grow. Poor workers, disabled and retired don’t or can’t pay more taxes. Even the middle class at the lower end of the income scale can’t really afford to pay more in tax, due to the stagnation of service and blue collar wages.
Who does that leave? The rest of the middle and upper middle class. And if you’re a plumber making $80,000 year. Or a manager at Safeway making $100,000/year you may be thinking that those who make more than you should pay more. Perhaps so, but the additional taxes the upper middle class will be paying isn’t going to reduce your taxes or to reduce the deficit. It’s funding tax breaks for upper income earners.
The Sweet Spot
So the GOP will look for that sweet spot. The wealthy will get their cuts. Some of the poor will do a bit better if they qualify for earned income credits. But whats the range were they can offer small tax cuts to the lower middle income taxpayers, and how much can they increase taxes on the middle/middle and higher middle class taxpayers to fund their plan. And how high can they go in the income brackets before the taxpayers they start to squeeze become donors to their opponents.
This is about math, primary politics, election fundraising and rewarding mega donors first, and then a bit of economics. If you’re not a mega donor, You. Will. Lose.
This isn’t a Bernie Sanders versus Koch brothers moment. It’s a wealthy political donors versus the American middle class moment.