A new analysis of Democrats' proposed Build Back Better plan shows that it would deliver a tax cut for about two-thirds of U.S. millionaires.
The average tax cut for those making over $1 million would be $16,760, according to the Tax Policy Center (TPC) analysis released Thursday.
Driving the benefit detailed in the analysis, as Politico reported, is a House proposal in the budget reconciliation bill—pushed by centrist Democrats including Rep. Josh Gottheimer (D-N.J.)—to increase the state and local tax (SALT) deduction cap to $80,000—a plan previously panned as "a massive tax cut for the rich."
A result of the GOP tax cuts bill of 2017, the cap for itemized federal filers to deduct what they paid in state and local income taxes is currently at $10,000. An earlier House proposal had set it at $72,500. Even that adjustment, according to a TPC analysis out earlier this month, "would provide little or no benefit for low and middle-income households but generate a substantial tax windfall for those with much higher incomes."
"Raising the cap to $80,000 would not matter at all for the vast majority of households," the new analysis found. "But it would cut 2021 taxes for the top 1 percent by an additional $1,000 compared to the $72,500 version."
In a Twitter thread responding to the new analysis, economist and former President Barack Obama's chairman of the Council of Economic Advisors Jason Furman said the impact of the proposal "is even worse than I had feared," adding that "36% of those making up to $200,000 get a tax cut ($1,994 average tax cut)" and "66% of those making over $1 million get a tax cut ($16,760 average tax cut)."
Looking at the Build Back Better proposal overall, however, the analysis found that for nearly all income groups, there would be tax cuts on average for 2022.
It's a different story for "those in the top 1 percent, who will make about $885,000 or more. They’d pay about $55,000 more than under current law," according to TPC. "Those in the top 0.1 percent, who make about $4 million and up, would pay an additional $585,000 on average, a 5.9 percent reduction in their after-tax income."
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In the Senate meanwhile, Sens. Bob Menendez (D-N.J.) and Bernie Sanders (I-Vt.) have offered a compromise approach.
They've proposed keeping the $10,000 level over completely eliminating it, and lifting the cap for taxpayers with incomes below $400,000.
Speaking alongside Menendez at a press conference earlier this month, Sanders said: "We have heard reports that the House bill may include a proposal to raise the SALT cap to $72,500 for all Americans, including the wealthy. This approach would cost over $50 billion a year and would provide 37% of its benefits to the top 1%. In my view, that is not an acceptable compromise."
"We should be substantially increasing taxes on the top 1%," he added, "not giving the wealthiest people in America a tax break.”
This content originally appeared on Common Dreams - Breaking News & Views for the Progressive Community and was authored by Andrea Germanos.
Andrea Germanos | Radio Free (2021-11-12T16:30:56+00:00) Analysis Shows Proposal in House Reconciliation Bill Would Deliver Tax Cut for Millionaires. Retrieved from https://www.radiofree.org/2021/11/12/analysis-shows-proposal-in-house-reconciliation-bill-would-deliver-tax-cut-for-millionaires/
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