CBO Says Megabill Would Help Rich And Hurt the Poor

BY RICHARD RUBIN

WASHINGTON— Republicans’ tax-and-spending megabill would give more money to middle-income and high-income households while taking benefits away from low-income people, according to a Congressional Budget Office analysis released Thursday.

The study by Congress’s nonpartisan scorekeeper looks at the combined effects of many of the House bill’s tax reductions and its cuts to federal programs, including Medicaid and nutrition assistance. The Republican-controlled Senate is considering changes to the measure, which passed the House last month.

The bill’s benefits increase steadily with income. Households near the middle of the income distribution would see their resources increase because of the bill by an annual average of $500 to $1,000, providing a boost worth 0.5% to 0.8% of their income. The top 10% of households would see a gain of about $12,000, or about 2.3% of income, largely because of tax cuts. That is all compared with current law, a scenario in which Trump’s 2017 tax cuts expire as scheduled Dec. 31.

On average, according to CBO, the bottom 30% of households would come out worse off, losing household resources. Income groups above that get more resources than they would under current law, on average. The bottom 10% of households would lose about $1,600 because of benefit cuts, equal to about 3.9% of income.

The House bill would permanently extend the 2017 tax cuts.

Those cuts lowered tax rates, shrank the estate tax, aided business owners, increased the standard deduction and boosted the child tax credit.

On top of those extensions, Republicans are proposing new, temporary tax cuts that largely benefit middle-income households— people who make enough money to pay income taxes. The proposals include further expansions of the standard deduction and child credit as well as versions of Trump’s campaign promises to cut taxes on tips, overtime pay, senior citizens and auto-loan interest.

The tax cuts do relatively little for lower-income people who don’t work or who pay federal payroll taxes but not income taxes. But many of them would be affected by the proposed changes to the Medicaid and food-aid programs, changes the Republicans have hailed as a major step toward lowering federal spending. Medicaid, a joint federal-state program, provides health insurance to more than 70 million low-income and disabled people.

The CBO analysis examines only the House version. Overall, the bill would increase budget deficits by $2.4 trillion over a decade. Republicans say that estimate misses the economic growth the bill would create, and they contend that the growth would raise wages and help middleincome households.

Democrats have highlighted the contrast between the bill’s tax cuts for higher-income households and the cuts in Medicaid and the Affordable Care Act, calling the proposals immoral.