DES MOINES | They are being sold as a middle-class tax cuts.
But some middle-class workers in Iowa eventually would pay more under tax law changes being considered in Congress, according to multiple reports from progressive and center-left think tanks.
With majorities in both chambers of Congress and a president in the White House, Republicans hope to check off one of their top policy goals: an overhaul of federal tax laws that includes reducing many tax rates, including for individuals and families.
The U.S. House and U.S. Senate have created separate proposals, and they hope to pass a bill and get it to President Donald Trump this year. Both bills are being advertised by the GOP as tax cuts for middle-class workers.
“What Iowans need to know is taxes under the Republican plan are going to be cut for the middle class,” Ronna McDaniel, the national Republican Party chairwoman, said during a recent interview in Des Moines.
Not everyone agrees.
In Iowa over 10 years, middle-class workers -- the middle 20 percent of wage earners -- will on average see an overall tax increase of $40 per year under the Senate bill, according to the progressive Institute on Taxation and Economic Policy. The poorest 20 percent will see an increase of $70, and the second 20 percent an increase of $60.
While those are modest increases, they are not tax cuts, as the proposals are advertised.
“The point is not the size of the increase at those levels, but the fact that those taxpayers cannot expect any, or any substantial, tax benefit,” Anne Discher, interim director of the nonpartisan Child and Family Policy Center in Des Moines, said in a report filed by the progressive Iowa Policy Project, which has been critical of the tax cut proposals.
Over the same period, the top 1 percent of wage earners will see a $4,770 tax reduction, according to the institute.
That is not the only independent report to reach such a conclusion.
Taxes would go up on nearly two-thirds of U.S. middle class workers -- by an average of $140 per year -- under the Senate bill, according to a Nov. 20 report by the nonpartisan Tax Policy Center.
Nearly a third of the poorest 20 percent also would see an increase, as would more than half of the second 20 percent of wage earners.
The Tax Policy Center’s findings were similar when analyzing the House bill in a Nov. 13 report, under which 30 percent of U.S. middle class workers and 13 percent of the poorest would see tax increases.
Both analyses of the Senate bill take into account its repeal of the mandate that most individuals carry health insurance. Economists say repealing the mandate -- and the tax penalty for those who do not -- will drive up costs for low-income individuals who obtain insurance through the federal marketplace.
By contrast, 83 percent of the top 1 percent of wage earners -- and 98 percent of the top .1 percent of wage earners -- will see tax reductions under the Senate bill, according to the Tax Policy Center.
Under the House bill, 71 percent of the top 1 percent would see a tax reduction.
“A weekend of further scrutiny by responsible analysts shows just how much this legislation is skewed toward the wealthy and most powerful,” Mike Owen, executive director of the Iowa Policy Project, said in the organization’s analysis. “When you look beyond the early years of this plan, you see that low- and middle-income Iowans are whacked by this plan in 2027. They’ll pay more in tax, on average, and many will have lost their health insurance while millionaires, billionaires and corporations bank the benefits.”
The GOP tax overhaul proposals have been unpopular in public opinion polls. Just 30 percent of Americans support the proposals, according to an averaging of multiple national polls, calculated by George Washington University political scientist Chris Warshaw.
That level of public support is lower than any major piece of federal legislation passed in the past 30 years, and is higher only than the same GOP Congress’ failed health care overhaul proposals from earlier this year, according to Warshaw’s research.
Despite the low approval ratings and the multiple reports that show some middle-class and low-income taxpayers could eventually pay more, Iowa’s Republicans in Congress, like most of their GOP colleagues, are defending the tax overhaul bills.
Chuck Grassley, Iowa’s senior U.S. senator, did not dispute the reports’ findings, but said most Iowans will see a tax cut.
“While every individual case is different, on average, income groups across the board will experience a tax cut. That includes the vast majority of Iowans,” Grassley said in an emailed response to questions. “Common sense measures, like doubling the child tax credit and the estate tax exemption, will give a hand up to taxpayers, family farmers and business owners. It will let people keep more of their own money instead of sending it to Washington.”
Many Republicans, including U.S. Rep. Rod Blum, a Republican from eastern Iowa, argue the economy will grow as a result of the tax cuts, and that will boost incomes and overcome losses projected in the analyses.
“(Economic growth) following tax reform, proven by both the Kennedy and Reagan administrations, will reignite our economy, create jobs, and increase wages through competition for labor,” Blum said in an emailed response to the bureau.
Blum also said Congressional rules require some tax cuts to be phased out after 10 years, but he is “very confident” those cuts, years down the road, will be extended before they are phased out.