Fact Checker: Is No One Safe From Democrats’ “Reckless Tax Hikes”?


Senator Chuck Grassley speaks during a September 24 question-and-answer session on public safety with law enforcement officials in eastern Iowa at Mr. Beans’ house in Marion. (Jim Slosiarek / The Gazette)

Republicans are united in their opposition to a federal budget reconciliation bill that Democrats in the U.S. Senate hope to pass next month as part of President Joe Biden’s economic agenda.

The Build Back Better Act was proposed as a $ 3.5 trillion legislative package that included $ 1.3 trillion in tax breaks and about $ 2.3 billion in revenue increases to fund a kindergarten. universal free, a free community college, reduced prescription drug costs and other priorities over the next 10 years.

But it has been the subject of a wave of negotiations in recent days over its scope and cost, with Biden acknowledging that entire sections like free community college tuition would be cut and Congress Democrats considering a tax on billionaires instead of higher income and corporate tax rates.

We therefore do not yet know what will be included or removed from the final bill. On September 27, while commenting on the first Build Back Better Act, US GOP Senator Chuck Grassley of Iowa tweeted the following (which has been modified for clarity):

“Democrats pledge not to raise ‘1 penny’ in taxes on people earning less than $ 400,000. Do not believe it. The joint tax committee’s non-partisan analysis shows that no income group is immune to the Democrats’ reckless tax hikes. Over 12% of taxpayers with incomes of $ 50,000 to $ 100,000 would see (a) a tax increase and 35% of taxpayers with incomes of $ 100,000 to $ 200,000.

Analysis

Last month, the United States House Ways and Means Committee released a budget reconciliation bill that includes proposed tax breaks for low-income families and businesses, as well as tax increases to fund the expected cost of $ 943 billion of the bill’s spending measures.

It should be noted that claims similar to those cited by Grassley in his tweet have also been made by other senior GOP officials as they push back Democrats’ efforts to pass this legislation in recent months.

The first part of Grassley’s statement refers to the proposed increase in the top tax rate, which would rise to 39.6% for people earning over $ 400,000 or for joint filers earning over $ 450,000.

In response to the Fact Checker’s request for supply, Grassley’s office highlighted figures released in a Sept. 22 report from the Congressional Joint Committee on Taxation, a legislative committee that calculates revenue estimates for tax legislation under review by the Congress. Grassley is a member.

For that 35% statistic, Grassley’s office pointed to a section of the report that estimates the percentage of taxpayers by income category who would see a tax increase or decrease in the 2023 calendar year.

Of those earning $ 100,000 to $ 200,000 per year, 24.1 percent should see a tax increase of between $ 100 and $ 500 and 10.7 percent could see an increase greater than $ 500. In total, this represents 34.8%.

There’s a bit more math involved with that 12% figure cited by Grassley. In an email to the Fact Checker, the senator’s team said the calculation used numbers from an April 15 report from the Joint Committee on Taxation.

According to the report, 45.867 million taxpayers are in an income bracket between $ 50,000 and $ 100,000 (which includes $ 28.1 million from $ 50,000 to $ 75,000 and $ 17.767 million from $ 75,000 to $ 100,000).

Using the September 22 committee’s findings, it can be determined that 5.653 million taxpayers with incomes between $ 50,000 and $ 100,000 would see a tax increase of $ 100 or more. That number divided by the total number of filers in that income bracket – 45.867 million – comes to 12.3%.

This calculation is solid and both figures cited in Grassley’s tweet are verified.

On the flip side, the Joint Committee’s September report found that 29.7 percent of individuals under the $ 100,000 to $ 200,000 tax bracket would see their taxes cut for 2023. Additionally, reductions tax would be felt by 24.4 percent of those earning $ 75,000 and 24.7% of those earning $ 75,000 to $ 100,000.

Almost 17% of taxpayers in all tax brackets would pay more in 2023, including some who earn less than $ 400,000, according to an Associated Press analysis of a joint committee report released on September 14.

However, 40 to 60% of taxpayers are also expected to receive an average tax cut of around $ 630, according to the Tax Policy Center, a non-partisan think tank.

It’s fair to say that Americans earning less than $ 400,000 could see their taxes increase under the original plan, although the increase is small.

In this joint committee report cited by Grassley, the data shows that tax increases would also be imposed on a small percentage of those earning $ 50,000 or less per year. For example, the biggest proposed tax cut is a 65.7% cut for Americans earning between $ 10,000 and $ 20,000 per year.

If the lowest 80 percent of incomes suffer a tax hike, they would see a 0.2 to 0.6 percent drop in their after-tax income, according to the Committee for a Responsible Federal Budget, an advocacy organization non-profit rights. For a typical middle-class family, the analysis indicated that this works out to between $ 180 and $ 260 per year.

What Grassley’s tweet fails to mention is that a number of analyzes by tax policy groups have found that most of the burden proposed under the tax plan falls on those earning the income. the highest.

According to the Committee for a Responsible Federal Budget, 80 to 90% of tax increases would affect the richest 5%.

Households that fall below this top 1% of income in 2021 would experience a reduction of almost 18% in their after-tax income, or their income after deducting all taxes. This equates to an average tax increase of over $ 100,000, according to the American Enterprise Institute.

Conclusion

The Iowa senator is right, some Americans earning less than $ 400,000 would see tax increases, and has the data to support his specific claims about the percentage of people in specific income groups who would see an increase in taxes. ‘taxes. Analyzes of the tax proposal have shown that these increases will most likely be very small for the average income, and will be felt mostly by the wealthiest Americans. In addition, a larger percentage of people in these income brackets would actually benefit from a tax reduction.

We give this statement a B.

Criteria

The Fact Checker team checks statements made by an Iowa political candidate or national candidate about Iowa, or in advertisements that appear in our marketplace.

Complaints must be independently verifiable.

We assign marks from A to F based on accuracy and context.

If you spot a complaint that you think needs to be verified, email us at [email protected]

The members of the Fact Checker team are Erin Jordan, Michaela Ramm and Marissa Payne. This fact checker was researched and written by Michaela Ramm of The Gazette.


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