www.qns.com I LIC COURIER I NOVEMBER 2017 43
TAX TIPS
Republicans Won’t Rule Out Tax Hikes for
Some in the Middle Class
BY JOHN SAVIGNANO, CPA
President Trump and Republican lead-ers
have positioned their sweeping tax rewrite as
a way to cut taxes on the mid-dle class. But
some top officials are now saying the plan
may not benefit everyone in that income
group.
The acknowledgment could compli-cate the
administration’s ability to sell the tax plan,
which is already facing ques-tions from Re-publicans
and Democrats over the cost and
effect of the ambitious rewrite.
Those questions have gotten more pro-nounced
after an analysis last week by the
Tax Policy Center, which found that the plan could cost $2.4 trillion
over the next decade, with the biggest benefits flowing to businesses and
the wealthiest Americans. The analysis found that near-ly 30 percent
of those in the middle class could see their taxes increase as a result of
changes to the deductions and exemp-tions many middle-class Ameri-cans
rely on to lower their tax bills.
The breakdown is based on the frame-work released by the “Big Six”
group of Republican lawmakers and administra-tion officials, which did
not include many details that could change the distribu-tional impact,
including an increase to the child tax credit and the potential for a
higher tax rate on the richest Americans. Yet top officials acknowledged
this week-end that a tax cut for everyone in the middle class may not be
achievable.
every single person’s taxes are different,” Treasury Secretary Steven
Mnuchin said in comments to ABC News on Sunday. “People take ad-vantage
of different things, so we can’t make that guarantee. But we can
say that’s our objective and that’s what we’re working to, and we want to
protect the middle class.”
The comments are a break from the 2016 presidential campaign, when
Mr. Trump’s advisers promised he would instruct Congress to write a
bill that did not increase taxes for any low- or mid-dle-income taxpay-ers.
Stephen Miller, who advised Mr. Trump during the cam-paign and
is now his chief policy adviser, said that “in sending our proposal to the
tax-writing committees, we will include instructions to ensure all low-
and mid-dle-income households are protected.”
Speaker Paul D. Ryan of Wisconsin said on Sunday on CBS’s “Face the
Nation” that while the “purpose of this is to get a middle-class tax cut,”
it is impossible to ensure that every middle-class American would see
their tax bill go down.
The framework proposes to double the standard deduction for individ-ual
tax payers and increase the child tax cred-it by an undetermined
amount. It would eliminate some personal exemptions and several
deductions, including those for state and local taxes and for out-of-pock-
et medical costs.
The elimination of the state and local tax deduction could adversely
affect those in the upper middle class, who tend to make heavy use of
the tax break. More than a third of the taxpayers who earn $150,000 to
$300,000 could see their taxes go up next year, the Tax Policy Center
report stated. The average tax bill for all income groups would decline
by $1,600, or 2.1 percent, in 2018, the report said.
A tax plan that does not offer a cut for everyone in the middle class
could hurt its chances as Republicans try to pass a bill largely along
party lines.
John Savignano is a partner with Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second Floor, in Long Island City. If you
have any questions or require additional information, please call John at
718-707-0955.
