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Lower-income earners face tax increases under revised Senate bill, new congressional analysis says

Senate Finance Committee Chairman Orrin Hatch (R-Utah) (Win McNamee)
Senate Finance Committee Chairman Orrin Hatch (R-Utah) (Win McNamee)

Low-income earners would pay more in taxes starting in 2021 under a revised Senate Republican bill, according to a congressional analysis released Thursday.

People with incomes between $10,000 and $30,000 a year would see their overall taxes decrease in 2019 along with all earners, but that would reverse in 2021, according to a report from the nonpartisan Joint Committee on Taxation.

By 2023, people with incomes below $10,000 also would see increases.

All other income categories, including those earning more than $1 million a year, would see tax decreases through 2025.

But in 2027, taxes would go up overall for every income group under $75,000 because the revised Senate Republican bill calls for tax cuts and other changes to the individual code to expire at the end of 2025.

The large cut in the corporate tax rate, to 20% from 35%, would be permanent under the Republican bill.

The new analysis created another problem for Senate Republicans in their effort to pass a tax overhaul.

Senate Finance Committee Chairman Orrin Hatch (R-Utah), who drafted the bill, and other supporters have touted a Joint Committee on Taxation analysis of the original bill that showed tax decreases in all income categories to dispute Democratic criticism that the plan is tilted toward corporations and the wealthy.

Changes to the bill this week altered its overall effects. The revised Senate bill added a repeal of the individual mandate under the Affordable Care Act that requires all Americans to have health insurance.

The Joint Committee on Taxation projected in its score of the revised bill that without that mandate, some low-income earners would opt not to buy healthcare coverage, so would not receive the Affordable Care Act's federal tax credits, Hatch said. Without those credits, their taxes would increase, Hatch said.

"We’re seeing some taxes go up because of a scoring assumption, not because of tax rates or policies," Hatch said at the start of a Finance Committee hearing Thursday. "Anyone who says we’re hiking taxes on low-income families is misstating the facts."

But Sen. Ron Wyden (D-Ore.), called the report "jaw-dropping news."

"According to the latest figure in 2021, families earning $30,000 and under are going to get clobbered by a tax hike of nearly $6 billion to pay for this handout to multinational corporations," he said. "I believe this process ought to end right here and now."

In 2021, the analysis said, total federal taxes paid by people with incomes between $10,000 and $20,000 would increase by $2.8 billion. And taxes paid by people with incomes between $20,000 and $30,000 would increase by $3 billion.

Those figures would rise in 2023 and 2025, the analysis said. Also, in 2023, taxes on people with incomes of less than $10,000 would increase by $178 million overall.

12:55 p.m.: This article was updated with additional details from the Joint Committee on Taxation report.

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