According to a new report by The New York Times, taxes will go up for many Americans starting in 2021, and the Republicans are to blame. The tax hike was planned all the way back in when President Donald Trump passed the 2017 Tax Cuts and Jobs Act, which lowered taxes for most Americans at the time. However, that temporary tax policy counted on the automatic increases coming next year.
The Times found that the Tax Cuts and Jobs Act will cause "automatic, stepped tax increases every two years" beginning in 2021. By 2027, these tax increases will impact nearly all Americans — except for the extremely wealthy. That's because the tax policies built into the bill target those with an income of $75,000 per year or less, about 65 percent of American taxpayers.
Some, including the Times' Joseph E. Stiglitz, assume that these tax increases were calculated to come after the 2020 presidential election when Trump's bid for re-election would be over one way or another. The increases may serve as an attack on President-elect Joe Biden, allowing Republicans to blame him even though they pass these tax increases under the Trump administration.
The provisions of the Tax Cuts and Jobs Act will reach full maturity in 2027, effectively dividing the nation into two groups, according to Stiglitz — those making over $100,000 per year and those making less. The latter tax bracket would encompass about 75 percent of American taxpayers. The provisions of the law are such that at that point, the rich could get regular tax cuts while the poor could not.
The bill also seems to come for the lowest-income tax brackets first, beginning with those making between $10,000 and $30,000 per year — now about one-quarter of Americans. This includes many below the poverty line, which is currently $26,200 per year for a family of four. Under this law, in 2021, those people will get a tax increase of about $365 each.
These increases on taxes for low-income Americans may have been put in place to try to make up for the massive tax breaks given to the extremely wealthy and corporations during the Trump administration. Stiglitz speculates that this created a budget deficit, explaining Republicans' hesitation to pass another massive stimulus check bill in 2020.
According to Stiglitz, this plan is still reversible, depending on how Biden approaches his first term as president. Biden's plan would increase taxes on any income over $400,000 so that even those making that amount would only have their taxes raised on the amount over $400,000. Whether Biden will be able to explain this averted disaster to jilted Trump supporters in a positive way is another story.