WASHINGTON, D.C. – Working families will be the primary beneficiary of a new bill passed out of Congress’s tax-writing panel last week, as new analysis debunks Democrats’ misleading claims otherwise. The $4,000 Guaranteed Deduction Bonus in the Tax Cuts for Working Families Act approved by the Ways and Means Committee provides targeted tax relief for working families, according to the University of Pennsylvania’s Penn-Wharton Budget Model. This study debunks Democrats’ fake talking point that the Guaranteed Deduction Bonus is a tax break for the wealthy. Following Ways and Means Committee hearings in West Virginia, Oklahoma, and Georgia, where hardworking Americans explained the challenge of Biden’s cost-of-living crisis, Republicans are delivering relief to workers who have had more than two months of pay stolen by inflation.
Ways and Means Committee Chairman Jason Smith (MO-08) released the following statement regarding Penn-Wharton’s analysis:
“Economists confirm the Guaranteed Deduction Bonus is a tax cut for working families. In our hearings across the country, we have heard over and over how families need help putting food on their table, clothes on their backs, and gasoline in their cars. The Guaranteed Deduction Bonus gives families hammered by inflation relief from the Washington price spike. Democrats’ tax priorities couldn’t be more different. Their top priority last year was creating nearly $700 billion in special interest tax breaks that overwhelmingly go to the wealthy, billion-dollar companies, and big banks.”
Read the Penn-Wharton analysis here.
Key Points –
Middle-Class Families and Seniors Will See Largest Benefit:
- 94 percent of families in the middle quintile of earners get a tax cut.
- Two-thirds of all households will get a tax cut.
- After-tax incomes would rise for households from the 20th through 90th percentiles of the income distribution.
- Middle-income families get the largest percent increase in after-tax income.
- Middle-income seniors will get a tax cut.
- The Guaranteed Deduction Bonus builds on Republicans’ 2017 tax reform law, which entirely removed the burden of federal taxation for millions of low-income families.
Guaranteed Deduction Bonus Does Not Help the Top 1 Percent
- Top 1 percent of taxpayers do not get a tax cut.
- The deduction phases out starting at $400,000 for families/$200,000 for single filers.
- From Penn Wharton: “These [wealthy] taxpayers are more likely to have mortgage interest payments, state and local tax liabilities, and charitable donations in excess of the standard deduction value, and therefore do not claim the standard deduction when filing. This tendency means that the tax benefit of expanding the standard deduction will be muted for higher-income groups.”
Tax Cuts for Working Families Act
- This bill provides a new $4,000 Guaranteed Deduction Bonus for the next two years, which will result in annual tax savings and more money in the household budgets of middle-class families who have been hit hard by the cost-of-living crisis.
- This applies on top of the current Guaranteed Deduction (also known as the “Standard Deduction”), which was doubled by Republicans in the 2017 tax reform law.
- Today, nine out of ten American households use the Guaranteed Deduction, which provides tax relief and fewer tax filing headaches.