LYNN — City voters supported Hillary Clinton over Donald Trump by an overwhelming majority in last year’s presidential race. But if the Republican tax package is enacted, many Lynn families will see their tax bill drop by more than $400.
While members of Massachusetts’ all-Democratic Congressional delegation oppose the GOP’s package overhauling corporate and personal taxes, an independent tax calculator reveals a family of four earning the median income on the North Shore would save an average of $913 on their federal taxes.
U.S. Rep. Seth Moulton has called the president’s proposal a “scam” and U.S. Sen Elizabeth Warren told MSNBC “It’s a $1.5 trillion giveaway to giant corporations and raises taxes on those making less than $75,000.”
But an analysis of the reform by Time.com’s Republican Tax Plan Calculator reveals a family of four in Lynn earning the median income of $47,429 would pay $427 less in taxes. The number was arrived at this way: The current tax rate at this income tax level is 10.9 percent or $5,123. Under the proposed changes for next year, the tax rate would be reduced to 10 percent, or $4,700. But when the tax break expires in 2027, the tax rate will rise to 10.8 percent, or $5,076.
Other families earning the median income in The Item‘s coverage area will see their taxes cut by an average of $612 in Revere to as much as $1,547 in Lynnfield (see chart.)
Under the House plan, the number of tax brackets would be reduced to four: 12 percent, 25 percent, 35 percent and a top rate that stays at 39.6 percent for millionaires. The Senate measure calls for seven brackets of 10 percent, 12 percent, 22.5 percent, 25 percent, 32.5 percent and 35 percent but lowers the top rate to 38.5 percent for high-income individuals and couples.
The corporate tax rate would be reduced to 20 percent from 35 percent and would be permanent, and it would allow entrepreneurs to deduct up to 20 percent of their business income.
The bill has been approved by the U.S. House and the Senate was considering it at press time.
But Massachusetts Secretary of State William Galvin said the Republican plan would disproportionately harm Massachusetts taxpayers.
“The tax breaks for individuals are temporary while the tax cuts for corporations, which are much more generous, are permanent,” he said. “If it’s such a great deal, why shouldn’t they all be permanent?”
He said families who depend on the credit for home mortgage interest, school loans, state and local tax deductions, and historic renovations to reduce their taxes will be hurt because those adjustments would be reduced or eliminated under the Trump plan.
“The president’s proposal has two fundamental flaws,” Galvin said. “It doesn’t pay for itself at a time when the deficit is high, and it treats corporations better than people.”
Last-minute changes to the legislation would allow taxpayers to deduct up to $10,000 in state and local property taxes, a change that was pushed by New England lawmakers.
The Tax Foundation, a nonpartisan think tank in Washington, D.C., said the measure is a mixed bag.
“Looking at the proposed tax cuts and the potential economic benefits from business tax changes, we see people in all income groups seeing a tax cut,” said John Buhl, a spokesman for the nonprofit. “There’s no way to do a tax overhaul that ensures absolutely no one will see a tax hike. The idea is to lower the tax rates, but get rid of some of the tax breaks that are on the books to level the playing field.”
To check how the Trump tax plan would impact your family, go to: http://time.com/5015990/republican-tax-plan-calculator/.