Now that President Trump’s promised tax reform bill has passed both the House and Senate, more informed analyses are coming out based on what actually ended up in the final bill.
As you might expect, there is disagreement depending on who is putting the analysis together, but there are several conclusions that seem indisputable.
First, the effects of this bill will be very different short term vs. long term. Because of Senate rules limiting the impact of legislation on the deficit after 10 years, several provisions are set to expire in 2025 unless a future Congress extends them.
Second, this bill is a bigger win for corporations than people. While the bill will lower tax rates for most companies and individuals initially, the corporate cuts are permanent while the individual cuts are among those that expire in 2025.
Also, while most Americans will get a tax cut at first, the wealthy will see the bulk of the savings even though the bill was pitched as a way to help the middle class. According to the nonpartisan Tax Policy Center, the average middle-income ($49,000-$86,000) taxpayer will save nearly $1,000 dollars in 2018. Meanwhile, the average taxpayer with income between $308,000 and $733,000 would save $13,500 in 2018.
Even in the short term, while many individuals will see tax cuts, they may not save money overall. That’s because the bill also eliminates the individual mandate from the Affordable Care Act, which will likely lead to premium increases.
Finally, it is likely to increase the deficit significantly—multiple analyses predict an increase ranging from $500 billion to more than $2 trillion—even taking economic growth into account.
It will take several years to see the true impact of this tax bill, and there might not be much public outcry next year when most people pay less. But it seems like a rushed bill that increases the deficit more than it needs to and doesn’t help the average American as much as it should.