One side says that the lower- and middle-income taxpayers will see larger tax cuts next year, while the other side indicates that the reductions are not big enough.
On Wednesday, Republicans passed the Tax Cuts and Jobs Act, which will be signed at a time to be determined by President Donald Trump. U.S. Sen. Pat Toomey, R-Pa., says the bill will decrease the tax burden for hard-working individuals and families. For the most part, lower and middle-income taxpayers will pay less in federal taxes, he said.
But U.S. Sen. Bob Casey, D-Pa., called the tax overhaul a “raw deal for Pennsylvania families,” adding that the “middle class is getting the short end of the stick while the super-rich and big corporations get a windfall.”
Charles Mitchell, Commonwealth Foundation president and CEO, disagrees with Casey.
“In the 31 years since Congress last reformed the tax code, it has become a bloated and burdensome drag on the economy, hindering economic expansion, job creation, and wage growth for Pennsylvania families,” he said. “In fact, Pennsylvanians spent nearly one-third of the year working to pay their local, state, and federal tax bills in 2016.”
What’s more, decreasing the corporate business rate from 35 to 21 percent will alleviate the tax burden, making Pennsylvania more competitive in the global marketplace and promoting business investment, Mitchell said.
“As a result, this bill will help create an estimated 13,000 jobs in Pennsylvania and 339,000 jobs nationwide,” he said. “After four tax hikes in the last eight years at the state level, Pennsylvanians should cheer the historic federal tax reform bill passed by Congress this week. This reform will put more money back in the pockets of Pennsylvania families and job creators — where it belongs.”
But rather than reauthorize the now-expired Children’s Health Insurance Program or put money into infrastructure, such as roads and bridges, to create jobs, Casey said that the GOP passed a tax plan that provides more than $36 billion in 2019 to the richest 572,000 households in the United States — those earning more than $1 million a year.
“The 90 million American households making under $50,000 a year will only see a fraction of that. By 2027, the Republican tax plan gives 83 percent of the cuts to the top 1 percent. To make matters worse, the GOP tax plan creates an incentive to offshore jobs,” Casey said.
Marc Stier, director of the Pennsylvania Budget and Policy Center, sides with Casey.
“The Trump-GOP tax cut bill, which passed the House on a party-line vote with 12 Republicans voting against (Tuesday) afternoon and passed the Senate early (Wednesday) morning, reminds us that history does not move in a straight line,” Stier said. “There are moments, like this one, in which America takes a step away from its promise of equality and justice for all. A combination of ideological zealotry, partisan extremism, and financial and political power has given us legislation that will cut taxes for the richest Americans while ultimately raising taxes and insurance premiums for working people and the middle-class and taking health insurance away from 13 million people.”
The benefactor will be Wall Street, while everyone else will be hurt by higher taxes, insurance premiums, deficits, interest rates, as well as the slashing the social safety net, he said.
The tax reform means more money for the middle class, a change voters were seeking out, U.S. Rep. Glenn Thompson, R-Pa., said.
“Democrats opposed this law because they’re committed to the status quo, and with it, a tax code filled with loopholes and deductions for special interests,” he said.
Toomey said that the restructured business tax code will allow American workers and businesses to go head-to-head globally, inspire a surge in economic growth and provide better-paying jobs.
“This bill fundamentally shows that we believe in the capacity of the American people to restore the vibrant economic growth that we used to take for granted,” he said.
