Who would be the winners and losers from the Senate tax bill? - Bring Me The News

Who would be the winners and losers from the Senate tax bill?

The Senate passed the tax bill late Friday night.
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Senate Majority Leader Mitch McConnell presenting the tax plan.

Senate Majority Leader Mitch McConnell presenting the tax plan.

The U.S. Senate passed its version of the Republican tax bill by a close vote of 51-49 late Friday evening/Saturday morning.

It's being hailed as a spark for economic growth by the Republican Party, and a massive tax giveaway to the rich by opponents.

GoMN has taken a look at who would benefit and who lose out if the Senate's tax bill were to pass in its current form, without changes. 

(Note: Before going to President Donald Trump for his signature, the bill will need to be matched up with the House's version of a tax bill – meaning some tweaks are likely.)

Winners

The rich: Take your pick from the benefits here. The top tax rate would reduce from 39.6 to 38.5 percent, corporate tax would drop from 35 to 20 percent, and the estate tax exemption is doubled to $11 million for single returns, and $22 million for joint returns.

There's even a tax break for private jet owners.

Either way you cut it, the bill sees massive giveaways to the wealthiest in society, who benefit more than any other income band from the changes. Here's one chart explaining the impact from the nonpartisan Institute on Taxation and Economic Policy.

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Big corporations: The proposed reduction of corporation taxes from 35 to 20 percent would represent massive savings for the nation's biggest companies.

Because of exemptions, these companies right now typically only pay an effective tax rate of around 25 percent. But the cut nonetheless would slash tax bills significantly.

As Madison.com reports, there are provisions for temporary tax cuts for small businesses through cuts in pass-through taxes, but these are smaller than what major corporations can expect to save.

Most of the middle class (for now): There are changes to the tax brackets that should result in cuts for middle-class earners from the low end to the high.

What's more, most of the people who take the standard deduction should see some money back, as it's almost doubling to $12,000 for individuals and $24,000 for couples.

So if you take the standard deduction, you could well see a tax cut.

The child tax credit is also doubling as well, to $2,000 per child. 

Some 80 percent of Americans earners $50,000-$75,000 would see an average tax cut of around $850, the Chicago Tribune notes.

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Some lower-paid workers would be taken out of tax altogether because of the standard deduction increase – though some GOP senators, including Marco Rubio, note the bill does little to help the poorest who already don't pay tax.

It remains to be seen how many would be better off overall though, because of changes to healthcare made in the bill (more on this later).

People with money in the stock market. What, you think big companies will pass their savings on to consumers and their employees? Maybe eventually, but one group of people who can expect to see quick returns are their shareholders and stock market investors.

Big cuts to corporate taxes would send share prices for companies surging, so anyone with interests in individual companies can expect to see higher dividends and stock buybacks.

Losers

Young people: While there may be some small tax cuts in the short term for lower- and middle-earners, this tax bill has significant implications for future generations.

Why? Well, because despite claims from Republicans that the tax cuts will pay for themselves via economic growth, tax policy groups have said they will actually add $1-1.5 trillion to the national deficit over the next 10 years.

Adding to the deficit in exchange for immediate tax cuts would probably lead to difficult decisions a decade down the line – with the impact likely to be disproportionality felt by today's younger generations.

Most of the middle class (eventually): While the corporation tax cut to 20 percent is a "permanent" feature of the bill, all of the other tax cuts included in it are temporary, because of Senate rules.

That means many of the tax cuts for the middle- and lower-classes expire in 2025, Consumer Reports says.

Republican leaders say the tax cuts for middle classes can be renewed in some form before then ... but there's that deficit increase to worry about.

Impact of the tax bill – though this was before amendments agreed to late Friday (including the $10,000 cap on state and local tax deductions).

Impact of the tax bill – though this was before amendments agreed to late Friday (including the $10,000 cap on state and local tax deductions).

High-tax states – such as Minnesota: One of the key aspects of the bill is that you'll only be able to deduct up to $10,000 of state and local taxes (SALT) in your federal tax return – currently you can claim back all those taxes.

In Minnesota, more than 900,000 people deduct $17,200 on average in SALT every year (which includes property taxes), according to the governor's office. And because Minnesota is one of the highest-taxed states in the nation, its residents would be more impacted than those in other states.

It's unclear right now what the exact impact would be, but if you usually itemize your deductions, you might save more money by claiming the standard deduction instead.

Others might still be able to claim their SALT deduction but get a smaller tax refund than usual as a result. Some could end up paying more, and others might be unaffected.

The Institute on Taxation and Economic Policy (ITEP) told GoMN that it would only be worth the while for 198,000 Minnesotans to claim back their state and property taxes under the Senate bill – and most of those would be the wealthy.

People who buy health insurance (ie. most of us): Snuck into the tax bill was the repeal of the "individual mandate," an Affordable Care Act regulation that requires people have health insurance or face a fine.

The Congressional Budget Office estimates 13 million Americans be without insurance coverage in 10 years' time if the mandate were abolished, compared to 4 million if it's kept.

Fortune explains that many of those dropping insurance are likely to be healthier people who don't think they'll need it. This in turn would leave insurance companies covering more unwell people on average, raising premiums for everyone else.

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