Claims that the Republican tax reform efforts would maim middle-class taxpayers are false.
Without a doubt, many people, particularly graduate students and those with exceptionally high medical expenses, have legitimate concerns about how the Republicans’ tax reform efforts would affect them. Taxing tuition waivers and canceling the medical expense deduction, as the House bill does, are problematic in my view.
However, despite these issues, the Tax Cuts and Jobs Act as it stands now would significantly benefit middle-class taxpayers in Alabama, and throughout the nation.
The most important thing to keep in mind when considering how the Republican tax reform efforts would affect the average Alabaman is this: Almost three-fourths of the state’s taxpayers utilize the standard deduction. In 2014, 73.6 percent of filers claimed it, which means that they forfeited deducting medical expenses, mortgage interest, and student loan interest because the standard deduction reduced their tax liability more than itemization would have.
In 2015, the number of filers in Alabama who claimed the standard deduction was close to the same.
Nationally, nearly two-thirds of taxpayers claim the standard deduction yearly, with 68.6 percent passing up itemization in 2013.
The Tax Cuts and Jobs Act increases the standard deduction – nearly two-fold for some taxpayers – which will give significant tax relief to nearly 75 percent of Alabama’s taxpayers.
“For the people who take the standard deduction, the doubling of that is significant,” said Dr. Dan Sutter, professor of economics at Troy University, in an interview with Yellowhammer. “The elimination of the deductions doesn’t matter because they weren’t taking them in the first place.”
This blows a hole in many of the claims that Democrats and the New York Times’ editorial team are making against the bill, who cry through flawed argumentation that the bill burdens the middle-class with a higher tax liability.
It certainly is true that not every taxpayer will see his tax bill decrease, and some might see it increase, but that’s the nature of the beast.
“It is impossible” to ensure that, conceded Senate Majority Leader Mitch McConnell on CBS’s “Face the Nation” last weekend. “You can’t craft any bill that would guarantee no one was in a special category that might get a tax increase.”
Dr. Sutter also made the point: “For some of those people who itemize their taxes, the tax bills may actually make their tax bills go up.”
However, Dr. Sutter said those who itemize are generally wealthier individuals or families.
Overall, the Republican plan to cut taxes, despite its imperfection, will provide relief to average Alabamans.
Jeremy Beaman is a Huntsville-native in his final year at the University of Mobile. He spent the summer of 2017 with the Washington Examiner and writes for The College Fix. Follow him on Twitter @jeremywbeaman and email him at [email protected].
