Tags: Trump Administration | Trump Tax Reform | GOP | hidden | tax bracket | reform

GOP Creates Hidden 46 Percent Tax Bracket

GOP Creates Hidden 46 Percent Tax Bracket
House Majority Whip Steve Scalise, R-La., holds up a proposed postcard-sized tax filing form as he talks about the GOP agenda for tax reform, during a news conference on Capitol Hill in Washington, Tuesday, Oct. 24, 2017. (J. Scott Applewhite/AP)

By    |   Friday, 03 November 2017 10:13 AM

The Republican Party included a surcharge for Americans who earn more than $1 million in taxable income in their recent tax reform plan, creating an effecting tax rate of about 46 percent, Politico reports.

The GOP plan for every American pays a rate of 12 percent on their first $45,000 in taxable income, but individuals who earn more than $1 million will see an additional 6 percent tax "on every dollar earned, until it made up for the tax benefits that the rich receive from the low tax rate on that first $45,000," according to Politico's Danny Vinik.

"That surcharge remains until the government has clawed back the full $12,420, which would occur at about $1.2 million in taxable income. At that point, the surcharge disappears and the top tax rate drops back to 39.6 percent."

Vinik describes this as "a 'bubble tax,' because the marginal tax rate effectively bubbles up for a brief period before falling back to a lower level."

A spokesperson for the House Ways and Means Committee told Politico that the bubble tax is "the phase-out of a tax benefit" for the rich, not a surcharge, though they didn't dispute their calculations.

"The Tax Cuts and Jobs Act provides tax relief at every income level," the spokesperson added.

"I was just in a briefing with the White House on this," said Steve Moore, a tax expert with The Heritage Foundation, to Politico. "They didn't mention that. It seems kind of bizarre to me."

Moore, after Politico explained the plan for a bubble tax, said it's a "stupid policy" that flies in the face of supply side economics.

"All the benefits from rate reductions are from cutting the highest rate not the lowest rates," he said.

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Politics
The Republican Party included a surcharge for Americans who earn more than $1 million in taxable income in their recent tax reform plan, creating an effecting tax rate of about 46 percent, Politico reports.
GOP, hidden, tax bracket, reform
289
2017-13-03
Friday, 03 November 2017 10:13 AM
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