GOP, Democrats Spin Tax Plan

Summary

House Republicans on Nov. 2 introduced a sweeping overhaul of the nation’s tax code, and almost immediately both parties distorted the facts about the plan to advance their partisan agendas:

• The tax plan isn’t the “biggest tax cut in our history,” despite the president repeating this claim over and over. He said it again in remarks at the White House on the day the bill was released.
• House Minority Leader Nancy Pelosi claimed the bill was a tax hike for “millions of middle-class families,” while the president said it’s a “middle-income tax reduction.” It’s really both. There will be winners and losers under the plan.
• Trump said cutting corporate taxes “would increase average household income by $4,000,” citing the White House Council of Economic Advisers. But don’t bank on it. That could happen in eight years if the economy grows at the robust annual rate of 3 percent to 5 percent, the CEA says. One economist cited by the CEA put the figure at $800.
• Trump said “wages are starting to rise” now “for the first time in a long time.” In fact, wages have been rising for a while. For all private workers, average weekly earnings (adjusted for inflation) rose 4 percent during President Barack Obama’s last four years in office.
• Rep. Kevin Brady, chair of the tax-writing committee, said the estate tax “isn’t paid by the super wealthy” but rather burdens “family-owned farms and businesses.” The tax, paid by fewer than 5,000 people in 2015, falls on estates worth more than $5.49 million or nearly $11 million for a couple.
• Sen. Chuck Schumer went too far when he said, “I wonder if you can find someone whose income is over $1 million a year … who’s going to pay more. They won’t.” The vast majority of millionaires will not pay more, but some will, according to an independent analysis of the earlier GOP tax plan.
• Democratic Rep. Richard Neal wrongly claimed that capping the mortgage interest deduction negated a tax cut for a hypothetical family of four earning $59,000, a GOP example. But that family would get the tax cut without a mortgage interest deduction.
• Trump said the corporate tax rate “is 60 percent higher than our average competition.” That’s true for the top statutory rate, but not for the effective tax rate or average tax rate, which is the amount of taxes as a share of income.
• Sen. Elizabeth Warren said corporations are now paying 10 percent of federal tax receipts, when they paid 30 percent decades ago. That shift is due to several factors,