FACT CHECK: Would Working Class Families Only Get A ‘Couple Hundred Dollars’ Under The GOP Tax Plan?

Kush Desai | Fact Check Reporter

Former Labor Secretary Robert Reich claimed Wednesday that reputable analyses of the GOP tax bill have at most found “maybe a couple hundred bucks” of benefits for middle-class families.

Verdict: False

Several reputable studies estimate that many in the middle class would receive a sizable tax cut under the bill.

Fact Check:

As House and Senate Republicans attempt to pass the Tax Cuts And Jobs Act before Christmas, many commentators, including Reich, have continued to criticize the tax reform effort.

Reich claimed during a segment on CNN that prominent tax policy groups have estimated little benefit for the middle class.

“There are reputable groups that have looked at this very, very carefully, some of them are right there in Congress, and nobody has found a big tax cut for the average family, the middle-class or working-class family,” Reich said. “At most they found, maybe a couple of hundred bucks.”

Reich mentioned the Tax Policy Center (TPC) and Joint Committee On Taxation (JCT) to support his claim, but the most recent analyses by both groups suggest otherwise.

TPC, a left-leaning think tank, estimates that taxpayers earning between about $50,000 and $87,000 a year would, on average, see a tax cut of $840 in 2019 under the Senate plan.

Data from JCT, a nonpartisan congressional office, similarly indicates that middle-class taxpayers would receive a sizable benefit under the bill. Those making between $50,000 to $75,000 each year, for instance, would see an average tax cut of about $650 on their personal income taxes.

Not all income groups would see large tax cuts. JCT data suggests that working-class taxpayers earning $30,000 to $40,000 a year, for example, would only experience tax cuts of around $220 under the Senate bill in 2019.

But even more modest tax cuts may still be significant relative to a household’s income. While those earning between roughly $25,000 and $50,000 a year would only receive a $300 tax cut according to TPC, this would translate into a nearly 1 percent increase in after-tax income.

Reich is correct, however, that tax benefits in the GOP plan are skewed towards the upper end of the income scale.

“The big beneficiaries are people at the top and also large corporations,” Reich said. “And people at the top, because they own most of large corporations, are going to get a double break.”

TPC finds that taxpayers earning more than $150,000 a year would, on average, experience a 2 percent increase in after-tax income under the Senate bill in 2019, about twice what those earning between $25,000 and $50,000 each year would receive.

But Reich takes his claim too far by suggesting that middle-class families would receive a negligible tax cut, or perhaps even a tax hike.

“There won’t be anything under the tree. The average working family will see nothing in its stocking,” Reich said. “Maybe even a little tiny lump of coal.”

The tax plan does limit some deductions that help working- and middle-class families, which means that some households will experience a tax hike. TPC estimates that about 10 percent of taxpayers earning between $50,000 and $87,000 would see a tax hike in 2019 under the Senate bill. But 88 percent of these taxpayers would still receive tax cuts.

Reich went on to note that the tax plan would hurt the middle class more in later years of the next decade.

Many of the tax benefits for the middle class will expire by 2027 due to sunset provisions. TPC estimates that only 32 percent of taxpayers earning between about $50,000 and $87,000 a year would experience a tax cut in 2027, versus 88 percent in 2019.

TPC found that taxpayers in this income range would, on average, still see a negligible, but positive increase in their after-tax income.

While Senate rules limit Republican lawmakers from making these sunset provisions permanent, many Republicans are confident that Congress will extend them before their expiration anyway.

“The intent is once you get rolling on it, it will become permanent,” Republican Sen. Mike Rounds of South Dakota told The Washington Post.

Reich did not respond to a request for comment.

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Kush Desai

Fact Check Reporter


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