Democracy Challenged: The winners and losers of the Republican tax plan

The Republican tax plan is the first major win for Republican senators, members of Congress and President Trump this year. The bill faced serious backlash from Democrats, and a few Republicans, but regardless, it was passed on Dec. 1. Although Republicans claim this bill to be a major tax break for lower and middle-class Americans, it is not. This bill is merely a tax break for corporations and would add a trillion dollars to our deficit over ten years.

Corporations and the very wealthiest will pay less, while millions of people will immediately see a tax increase. This is a result of the repeal of the state and local income tax deduction, otherwise known as SALT and a limit of the deductibility on real estate taxes. Many blue states have much larger SALT deductions because their state and local income taxes are much higher, as opposed to a red state like Texas.

Examples are helpful to demonstrate the negative effect of the repeal of SALT and $10,000 limit on real estate taxes. Say a family makes a combined income of $100,000 and pays $10,000 in state and local income taxes and $15,000 in real estate tax. They will now pay federal taxes on $90,000, as opposed to $75,000 as would have been in the old plan.

In addition, the new plan scarcely saves anything for lower-income individuals. Say someone earns $20,000 annually. Under the new bill their deductible is now $12,000, and they pay taxes on $8,000 at 12%. Their tax bill is $960. Under the old plan, their deduction would have been $6,350, with a personal exemption of $4,050, bringing their tax bill to $979. A whopping $19 is saved.

Meanwhile, according to the Tax Policy Center, the top 1% of earners will on average save $28,000 under the new plan.

Equally as bad is how the plan hurts the middle class, it will also add $1.4 trillion to the national debt within the next 10 years. According to a survey conducted by the University of Chicago’s Initiative on Global Markets, 37 of 38 economic experts said that the tax plan will increase the national debt faster than the economy would grow.

This tax “cut” is terrible for the American economy and many taxpayers. Lowering the national deficit was once one of the core tenets of Republican values, but they seem to disregard this in their new bill. They claim it will boost the economy, and we will grow our way out of the immediate increase in the national debt. The Republicans claim it would cut taxes for the middle class, but that is a falsehood. Taxes are increased, especially for those who live in blue states. This tax bill is an affront to Republicans’ own claimed fiscal ideals.