A report released this week by a national political group found that proposed tax code changes put forward by the House Ways and Means Committee to fund sweeping social safety net expansion under the budget bill $ 3.5 trillion from Democrats could result in a tax cut. for 80% of Mainers while raising taxes only on the richest 5% of the state.
The report by the Institute on Taxation and Economic Policy (ITEP) found that the poorest 20% in Maine would see their taxes drop by 8.5% on average. In contrast, the richest 1% in the state would see their taxes increase by an average of 2.8% while the next richest 4% would see an average increase of 0.5% in their tax bill.
A similar situation would occur nationally, according to the report, with the poorest 20% seeing an average tax cut of 10% and the richest 1% paying 4.3% more on average. While the report warned that the impacts of policy changes may vary from household to household, “not all taxpayers of the poorest 95% would benefit from a tax cut,” the authors argued that Democrats’ system of funding President Joe Biden’s Build Back Better program would make the tax system much more progressive than it is today.
The report found that the two main drivers of the low and middle income tax cut included in the budget bill are the extensions of the child tax credit and the earned income tax credit. , both of which were adopted earlier this year by Democrats as part of a COVID-19 relief package.
The expanded child tax credit, which experts say could cut child poverty in half, is already paying dividends for families in Maine. a analysis Last month, by the Center on Budget and Policy Priorities, found that the number of families in the state struggling with child hunger fell 6% since monthly payments through credit began in July. Likewise, the income tax credit serves as a lifeline for many low-income Americans.
“The expansions of the Child Tax Credit and Working Income Tax Credit Bill would primarily benefit the poorest 60% of taxpayers and result in most income groups paying less overall. ‘federal taxes today, even in combination with tax increases, “ITEP wrote.
The discovery that the rich would pay more while many low-income families would get a break if the Democrats’ budget bill passed, as the wealth of those at the top continued to soar during the pandemic. A to study by Americans for Tax Fairness and the Institute for Policy Studies found that billionaires grew 62% richer from the onset of the crisis until mid-August of this year. Meanwhile, job losses caused by the pandemic having hit low-income workers the hardest, and the economic recovery has helped these workers the least.
This gaping disparity between the rich and other Americans has sparked new calls to tax the rich, a long-standing progressive political goal within reach of Democrats with the proposed budget of $ 3.5 trillion.
Party leaders try to submit the bill to the House for a vote next week. However, the demand of some centrist Democrats, including Representative Jared Golden – that a much smaller physical infrastructure plan be prioritized as well as the efforts of the party’s conservatives to reduce the larger budget bill could still thwart progress on the package.
Photo: Mainers mobilize in Augusta in 2019 for a fair tax code | tag