YOUNGSTOWN, Ohio (WKBN) – To help provide a sense of how the proposed Tax Cuts and Jobs Act would impact real taxpayers, the Tax Foundation has run the taxes of eight example households to show how the individual income tax provisions of the Tax Cuts and Jobs Act would impact individuals and families across the income spectrum.
The results show a reduction in tax liability for every scenario modeled, with some of the largest cuts accruing to moderate-income families with children and fixed-income retirees. Individuals with pass-through income also benefit substantially from the lower pass-through rate (click on the image below for a larger version).
According to CBS News, some low-wage and middle-class Americans are likely to benefit, thanks to the higher personal standard deduction and lower tax rates, although many may end up with fewer deductions, especially those in high-tax states. Middle-class gains may be scanty compared with those enjoyed by corporations and the wealthy, critics said.
“There is no evidence to suggest this plan as a whole will be positive for middle-income workers and much to suggest that when this is complete, it will be a significant net negative,” said Gene Sperling, a former director of the National Economic Council and Assistant to the President for Economic Policy in The White House, on a conference call to discuss the tax plan. “You can lower somebody’s taxes, but people understand there is no free lunch.”
Individual income taxes are only one component of the proposed Tax Cuts and Jobs Act, and changes to business taxation could have a significant impact on wages and economic growth.
“If we get this through, and I think we will, you’re going to see this economy take off like a rocket ship,” President Trump said of the new tax plan.
It may not be the “rocket ship” many are looking for but all of the Tax Foundation’s examples received a tax cut, although the size of that reduction varies.