CHN: House Tax Package Benefits the Rich over Americans with Low Incomes
The House Ways and Means Committee passed along party lines a package of three bills in June that would mostly benefit the richest one percent of Americans and foreign investors, while doing little for Americans with low incomes. Most of the provisions in these bills are business tax cuts; however, there is one provision to increase the standard deduction that would help some middle-income taxpayers.
According to the Institute on Taxation and Economic Policy (ITEP), under the proposed tax package:
- The richest fifth of Americans would receive $60.8 billion in tax cuts next year while the poorest fifth of Americans would receive $1.4 billion in tax cuts.
- The poorest fifth of Americans would receive an average tax cut of just $40 next year while the richest one percent would receive an average $16,550 tax cut next year.
- Because foreign investors own much of the stock in U.S. corporations, they would ultimately receive $23.8 billion of the corporate tax cuts next year.
- The only group of Americans receiving more than foreign investors next year would be the richest 1 percent, who would receive $28.4 billion.
- Clean energy tax credits included in the Inflation Reduction Act would be repealed to pay for the tax cuts.
In their current form, the tax cut in the House package would only be in effect for two years. But if they were made permanent, as many believe is the goal of the bills’ authors, they would cost more than $1.1 trillion over 10 years, according to the Committee for a Responsible Federal Budget. Additional analysis of the tax package shows that the legislation would provide retroactive tax breaks for corporate investments and business decisions that have already been made, and it would make it harder for the IRS to collect taxes that are legally owed by weakening rules designed to provide much-needed information about certain business transactions. The package could continue to move in the House in July.
Advocates are pushing back against the package, saying that Congress should instead be raising needed revenues by making corporations and the wealthy pay their fair share. Additionally, they insist that Congress’s top tax policy priority should be extending and expanding the Child Tax Credit and the Earned Income Tax Credit. It is unlikely that the House tax package will be able to pass the Senate in its current form, and advocates are insisting that any tax package that passes Congress this year must include provisions that help Americans with the lowest incomes, such as an expanded monthly refundable Child Tax Credit.